meek-investor

There is economic cataclysm going on in Iran. What guns and rhetoric have failed to do might be achieved by grubby old economics - the downfall of the nut cases who have been ruling Iran for sometime. The Iranian rial has plunged into free fall. It declined by 25% in one week in October against the US dollar. Since the beginning of 2011 it has fallen by 70+%. It was some 10,000 rial to the US $ in 2011. Its now around 30,000 rials to the US $. The rial is now virtually worthless. Inflation by official estimates is some 25%, in reality more like 70%. There is economic chaos. Why is this important ? You only have to look towards  the street protests that have sprung up in Iran to see how this is affecting everybody in Iran - the rich, the poor, and yes, even the mullahs. But, wait a minute. Iran is oil rich, right ? It should be rolling around in wealth. And yet, the country  is in deep crisis and the population is suffering.  Why ? If ever there was an example of how a rot...

Politicians will do anything to win elections; even good things ! You can't blame them , for after all that is the objective in politics. As I observed in the previous post, an economic blueprint is of no use unless a political way can be shown as well. So the task is to show that an economic plan will win an election. Or at least not lose one. I believe the time is ripe for that in India. The Congress government is almost certain to lose in the next general elections due in 2014. They have no plan to win it. No amount of cash doled out to the voter is going to help them win. Therefore they have nothing to lose. Ideal conditions to try something drastic. Make a fresh beginning. Manmohan Singh should retire and a grateful nation should say thanks for a lifetime of public service. Pranab Mukherjee can be kicked upstairs. Chidambaram, Anthony , Pawar etc are to exit with a 21st century Kamaraj Plan . For the lack of any other leader, Rahul Gandhi should take over as Prime Minister. He...

It isn't enough to just criticise. A critic must also state what is the alternative.There have been lots of criticism of India's economic performance in recent times and the government's seeming inability to do anything right, economically. The blogger has been one such critic too. But precious few have really laid down a comprehensive argument of what needs to be done , and equally how this can be done; for we cannot, and should not,  wish away political realities. Government action should be for sustained long term economic development - not short term fixes. Improving "sentiments" , like trying to bolster the stock market, is a waste of time and should not be anywhere in government's priorities. Issues like FDI in retail, fiddling with tax laws, which are getting a disproportionate amount of airtime, are all side shows - they won't make or break India. This blogger is no expert on anything. He is just a concerned citizen. So here's one citizen'...

Should we worry about India's economy ? Yes says Sriram , a friend and a most prolific and versatile blogger. He makes two or three posts a day  and has wide and original views on a number of issues.  On India's economy, he says "Less than a fortnight into the hundred days in India, the more I observed, the more I wondered whether India's economic "success" story was more hype than real.  That line of thinking morphed into to this column in which I wrote that "the economic health of India is not looking good." Every day, evidence seemed to pile on to further reinforce the impression that India could run into some serious economic troubles really soon.  I was particularly concerned that the country was not paying enough attention to the long-term requirements of resources, energy, and infrastructure ." You can read his full post here . Yes there's much to worry and despair about. We have made some progress, but make disproportionate n...

To many, the year gone by was a bad year. Natural disasters took their toll - the earthquakes in Japan & New Zealand, the floods in Thailand, Brazil and the Philippines,  Irene slapped the US earlier in the year, and just as the year was slipping by, Thane kicked Tamil Nadu. Unemployment remained rampant in the developed world ; there is nothing more demoralising than losing your job and not having a hope of getting another one. Large parts of Europe are in crisis. Austerity measures are hurting badly, especially in Greece, and now Italy. Inflation has hurt people in China and India and growth slowing down in both countries is ominous. The Arab world had a new spring, but winter seems to have set in somewhat prematurely.  You could be forgiven for ushering in the new year in a somewhat sombre mood. But there is every reason to look forward with hope. Adversity often brings the best in man. We can find strength that we did not even know we possessed. The Euro zone will hold...

Is Gils living in Angola or Mongolia ?? He isn't, but he very well could be. He is in the state of Tamil Nadu in India, but in terms of GDP he would be no different to living in Angola and in terms of per capita GDP, he would be the same as a Mongolian. This, according to a lovely chart by the Economist, which you can see here . They say a picture is worth a thousand words (something this blogger evidently doesn't believe because he regularly inflicts 1000 words on the reader, without a photo in sight). Surely a chart like this is worth 10,000 words. Brilliant, as the Economist usually is. Vishal can chose between Turkmenistan and Latvia. Sandhya can opt for Croatia or the Philippines. When she goes home, Reflections , who is now wonderfully active in the blogosphere after extensive bouts of laziness, can chose to be a Tunisian or a Papua New Guinean. Wow. All of a sudden, India doesn't seem to be that great an economic powerhouse, does it ? Each state by itself seems f...

Unless you have a visceral hatred of the IMF, you could not have missed all the media coverage of Dominique Strauss Kahn, its boss. The affair has exploded like a nuclear bomb on a number of fronts. Firstly there is the IMF itself, currently deeply involved in the European bailout situation. Secondly it has blown open the French Presidential race - he was the front runner and it was quite possible that Sarkozy would have lost to him in the elections next year. It has called into question Continental European tolerance for sexual profligacy of its leaders - surely the Italian Prime Minister Silvio Berlusconi is at least a bit worried. But this blog must remain a strictly non political one. This post is about the appointment of the new IMF chief - DSK has just resigned today and even if he is acquitted, is unlikely to get his job back. It has been an utterly shameful arrangement that a cosy understanding exists that the World Bank chief is an American and that the IMF chief is an Europea...

“This house believes that GDP growth is a poor measure of improving living standards”. That’s the proposition in the live online debate being currently run by The Economist. You can access this debate here . At the time of writing this post 68% of the online voters agree with this proposition. It seems rather the in thing to agree with the proposition. You can plausibly argue that there’s more to life than GDP. Gross National Happiness, first conceived by Bhutan the world leader in this concept, sounds appealing. Climate Change, Civil society, reduction in inequality – all seem to be nice concepts equally important to “living standards”. You can almost visualize the wrinkling of the nose at GDP, a very base and mercenary measure. An opinionated blogger, such as this one, has a view, obviously ! And the view is largely based on the marvelous example of China. The answer in China would be very clear. There is only one measure. GDP. Or rather growth in GDP. Full stop. Nothing else matters...

Inflation, of any sort, is bad. Some stability in prices, is necessary for orderly economic activity and for growth. Countries which have experienced hyper inflation recall it with absolute horror. But the most awful form of inflation is when there is huge inflation in food prices. In non food products, one can curtail demand if prices rise. But what do you do with food ? After all, you have to eat. In the last few months, food prices in India have gone through the roof. If you are living in India, you are experiencing it first hand. If you are abroad, you would have surely heard about it. The official food price inflation figure is 20%. In many key food items, the inflation has been much higher than that. The first hint came in pulses, a vegetarian Indian’s main source of protein. A kilo of arhar dhal (pulses) has apparently touched the unbelievable level of Rs 100/kg. Then came vegetables. Onions at Rs 35/kg, potatoes at Rs 40/kg, and so on. Sugar is now at Rs 50/kg. Name a food ite...

Since the beginning of the year, the prices of all sorts of risky assets – shares, oil, etc have increased by fantastic proportions. Take equity. In virtually any market in the world, you would have made returns of 50% plus, even if you are an idiot. Did somebody say we were in the midst of a huge crisis ? Here was massive money to be made, by just being there. Sounds too good to be true ?? As the old saying goes, when something is too good to be true, it usually is. I read a very interesting article by Nouriel Roubini , the highly respected Professor from New York’s Stern School of Business, in today’s Financial Times. Its somewhat technical, although very readable. I commend even a layman to read this. At the risk of extreme oversimplification, I will paraphrase his argument as follows - Interest rates are extremely low and will be maintained at very low levels by the US Fed to stimulate the economy - The dollar is falling. Because it is falling, everybody is short selling the doll...

President Sarkozy of France has proposed “Gross National Happiness” as an alternate measure to GDP in measuring progress of a nation. He was releasing the report of a study he had commissioned by two Nobel Laureates – Jospeh Stiglitz and Amartya Sen - on this subject. Now even for the flamboyant Sarkozy this is something. Presumably it is an attempt to push the French higher up on the world rankings as 35 hour week, August month long holidays, fine wine and such other niceties contribute to happiness, but perhaps not to GDP. This is not a new concept. The world leader in this is Bhutan – its former King was the originator of the idea and Bhutan has been adopting this for many years now. Click here for the Bhutanese logic of this – it makes an impressive read. The trouble is 99% of the world population cannot point to Bhutan on a map. Therefore it remained as an isolated concept which the irrepressible Sarkozy has caught on to. Of course there are many problems with GDP. A common crit...

When will the world come out of recession ? How will the recovery look like ? Questions that are in our thoughts all the time. Self appointed experts are falling over themselves predicting the answers to these questions. The flavour of the month seems to be to characterize the recovery after an alphabet. Some economists are predicting a ‘V” recovery – a straight rise after the steep down. Other think it will be a “U” – down, flat and then up again. Nouriel Roubini , an economist noted for being one of the few to have thought a recession was coming before it came, thinks it will be a “W” . As economists have to invent a term for everything, this will be a “double dip” recession. Now Sir Martin Sorrell, chief executive of WPP, an advertising giant, thinks it will be a “L”. Unfortunately, humility has not been a particular virtue of economists. The least they can do, after failing en masse to see a recession coming, is to keep quiet in penance. No. They are loudly proclaiming their abili...