Thought for the day
”You have your way. I have my way. As for the right way, the
correct way, and the only way, it does not exist."
-
Friedrich Nietzsche (German, 1844-1900)
Word for the day
Realpolitik (n)
Political realism or practical politics, especially policy
based on power rather than on ideals.
(Source:
Dictionary.com)
Teaser for the day
RSS is now virtually ruling the
country.
Enthused by success in Maharashtra
election, MIM is now seeking to spread in UP and Bihar.
Who should worry most?
It's half full
I have no problem in accepting that swinging between greed and
fear, the investor in me is little confused. Nothing unusual. Conflicting
signals from global and domestic economies and financial markets do often put
you in such a quandary.
The indications from the global markets are such that the
decoupling of G3 is taking place at rather accelerated pace. The consensus
appears to be suggesting that US economy is going to do relatively better;
whereas Euro zone and Japan will mostly fail in their struggle with
deflationary forces. Strengthening USD will only exacerbate the deflationary
pressure as commodity prices take a hit.
Many analysts and economists appear confident (see
here) that the end game of Mario Draghi's "whatever it takes"
strategy is much closer than it appears. it is only a matter of time before
Europe is faced with sovereign defaults and consequent banking crisis.
A few days back Bank of Japan failed to buy the desired amount
of bonds, under its QE bond buying program for want of adequate supply. With
benchmark yields firmly below 0.5% mark, JPY also looks set to take a plunge
along with Euro. The investors are clearly not buying the claims and promises
of Shinzo Abe or Mario Draghi's at par value.
Remember, despite the 2008-09 post Lehman fright, the
"deleveraging" at global level did never take place. To the contrary,
in past three years it has risen rather sharply.
This possibility sets global emerging markets, including India,
against a potent threat of collapse. The emerging economies, inter alia, face a
prospect of substantially weaker currencies, rendering them uncompetitive in
global markets, sudden and sharp reversal of capital flows, sustained lower
commodity prices (for economies largely dependent on commodity exports).
Remember, all this will likely happen when innovative and
unconventional monetary ideas would appear losing popularity and
acceptability...to continue
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