"There is not in the universe a more ridiculous, nor a more
contemptible animal, than a proud clergyman."
—Henry Fielding (English,
1707-1754)
Word for the day
Glocal (adj)
Of or relating to the
interconnection of global and local issues, factors, etc, e.g., a glocal
conference on community development.
Malice towards none
Waiting for some sermon on
Gita and Unpnishada from Rahul Gandhi!
First random thought this morning
If data is a weapon, than H. D.
Deve Gowda and Dr. Manmohan Singh could be in possession of the most potent
ones of all.
While HD presided over the
"Dream Budget" that let the animal spirit of Indian entrepreneurs
loose, something that the watershed 1991 budget could not do. The two terms of
MMS (2004-2014) saw India's growth galloping from sub 5% in 2004 to over 9% in
2008. The data also shows that he steered the economy remarkably well through
the global financial crisis.
But this, as I said, might just
be that Data. Nothing more. Those who love to use data to show the
unprecedented performance of the incumbent government are advised to read the
time series from 1991 at least.
And guess what, P. Chidambaram
may emerge as unlikely champion of growth, and Yashwant Sinha a close second.
A decade and counting
This was beginning of, what would
become a global financial crisis in no time. The crisis which would annihilate
some of the leading financial institutions like Lehman Brothers and Merrill
Lynch, threaten the solvency of some of the most powerful empires in history,
namely Portugal, Italy, Greece and Spain (Inappropriately clubbed under acronym
PIGS), lead to erosion of trillions of dollars from global wealth, cause
millions of job losses, imperil the unity of European Union, and push the world
into a prolonged period of low growth.
Surprisingly, the stock markets
did not react to the crisis immediately. After a small jerk in July 2007, stock
markets across the world rose dramatically. Except for Chinese equities that corrected
in October 2007, most markets rose sharply till January 2008. This was perhaps
the sharpest bear market rally, in my view. And then came the inevitable crash.
From last week of January to March 2009 was one of the worst periods in decades
in terms of stock returns.
The challenging times call for
tough measures. But that was not to happen in this case. The central bankers
across the world got united to bail the world out of this crisis through an
"unconventional method" - quantitative easing, an euphemism for
printing more money.
"Whatever it takes" was
the new paradigm. The mints across the world ran overtime. Centrals banks
printed enough money to buy all the junk available on street, bail out
profligate governments & errant banks, and splurge concessions on consumers
to boost consumption.
To their credit, the gigantic
effort did help in unfreezing the global markets, stabilizing the global
financial system, forced a certain degree of fiscal discipline amongst the
profligate government, pull out the global economy from recession (that was
widely feared to snowball into a worldwide depression, worst that the 1930
episode)
The strategy however created a New
Normal in the global economics. Something that was not there in the economic
text so books.
The unprecedented monetary and
economic stimulus failed to bring the inflation back. The commodity producers
continue to struggle. The economic growth potential for most developed
economies scaled down materially. The investment demand therefore seems unlikely
in foreseeable future. The bond yields remain close to their lows, despite
talks of imminent talk of policy reversal. Reflation and bond correction are
two trades that have deceived millions of traders following old text
books....to continue
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