"It is amazing how
complete is the delusion that beauty is goodness."
—Leo Tolstoy (Russian, 1828-1910)
Word for the day
Propinquity (n)
Affinity of nature;
similarity.
(Source: Dictionary.com)
Malice towards none
My Gotra and Caste is asked every time I conduct a religious ritual - from
birth of a child to death of an elder.
So what's wrong in this, if it changes nothing in terms of conduct of
rituals or cost of ritual?
And why the government should interfere in this, if
First random thought this morning
Extensive media coverage of
Chennai deluge has drawn global attention to the city. There is rush to help
the marooned people. It always feels good to see so much concern for fellow
countrymen and humanitarian efforts.
What I do not know is what is the
condition in other coastal areas, especially small villages. Are those poor
people getting adequate help?
TINA is ephemeral
Yesterday I highlighted that there is a debate as to whether TINA
(there is no alternative) puts India in a advantageous position to draw larger
share of global investment; or this actually makes India more vulnerable to
incremental deterioration in the global economic conditions? (see here)
This debate is prominent as India's peer largest EM group (BRICs)
are facing serious economic challenges.
Brazil is in the
midst of a dramatic economic downturn that’s left the country to suffer through
the worst inflation-growth outcome (i.e. stagflation) in more than a decade.
Unemployment and inflation are soaring (annual headline IPCA inflation at
10.28%, unemployment at 7.9% in August, up from just 4.7% a year earlier) while
output is plunging (IBC-Br monthly real GDP indicator down 6.1% Y/Y in
September) and the market is losing confidence in the government’s ability to
end a political stalemate on the way to shoring up the fiscal books and hitting
primary surplus targets.
Russia is in crisis
again, having been hit with the double whammy of plummeting energy prices and
heavy sanctions laid on by the West over Putin’s foreign policy.
Given that the country has been in recession for over a year as $40 oil
doesn’t pay the bills country’s struggling economy, the probability of a
Russian default cannot be as low as the CDS pricing is indicating.
(Source: Bloomberg)
China has reached
“peak debt”. Additional borrowing will not only prolong the Ponzi and thereby
exacerbate the eventual crash, but won’t even do much in the short-run to brake
the current downward economic spiral. That’s because China is so saturated with
debt that still lower interest rates or further reduction of bank reserve requirements
would amount to pushing on an exceedingly limp credit string.
To wit, at the time of the 2008 crisis, China’s official GDP was
about $5 trillion and its total public and private credit market debt was
roughly $8 trillion. Since then, debt has soared to $30 trillion while GDP has
doubled. And that’s only when you count the massive outlays for white elephants
and malinvestments which get counted as fixed asset spending.
So at minimum, China has borrowed $4.50 for every new dollar of
reported GDP, and far more than that when it comes to the production of
sustainable wealth. Indeed, everything is so massively overbuilt in China——from
unused airports to empty malls and luxury apartments to redundant coal mines,
steel plants, cement kilns, auto plants, solar farms and much, much more—-that
more borrowing and construction is absolutely pointless.
Though the market may like to work on TINA basis for few months.
But in my view this is a bad news for India. As I mentioned a few days ago (see here), in past
one decade the export destinations of India have changed in favor of emerging
markets from developed markets. The share of North America and Europe has
fallen in India's export basket whereas Asia and Africa have gained. Besides
USA, China (including HK), UAE and Saudi Arabia are now amongst our top five
export destinations.
Many of these economies might be in a midterm downtrend due to
correction in commodities cycle; hence the export demand from these economies
may not pick up in hurry. In fact these economies account for much of
"invisibles" also, and could be an additional cause of worry on that
count too.
I believe, weakness in emerging markets, especially China, is
rather a bad news for Indian economy.
...more on this next week
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