Bad economics, poor politics

Thought for the day

"To see what is right and not to do it is want of courage, or of principle."

-          Confucius (Chinese, 551-479BCE)

Word for the day

Sidereal(adj)

Determined by or from the stars.

(Source: Dictionary.com)

Malice towards none

Does a common person refer to a police constable as what AK did?

If yes, then AK is true to his positioning.

If not, you are true to yourself.

Bad economics, poor politics

The French President Francois Hollande has again mooted the idea of a United State of Europe (USE). He feels that Geek crisis has weakened the citizens' faith in European project.

To renew this faith it is necessary to strengthen the institutions of governance. “What threatens us is not an excess of Europe but its insufficiency,”, Holande wrote in the Journal du Dimanche weekly newspaper.

The president cautioned that populist movements had seized on Europeans' disenchantment with European institutions and were taking issue with Europe because "they are scared of the world, because they want divisions, walls and fences to return."

With public debt to GDP ratio of close to 100%, ever rising pension liabilities, a struggling economy, diminishing revenue, shrinking market share in global exports, rising youth unemployment, France has been occasionally sending jitters down the market's spine. Some in the market place are therefore seeing this as early signs of rising tendency of escapism, as the French government is struggling to introduce fiscal and labor reforms considered essential for the economy to avoid another Greek tragedy taking place on Paris.

It is commonly believed that the sublime idea behind a common Euro area was to put an end to centuries of conflicts between various European powers which have materially dissipated post second war. The paranoid might therefore smell an attempts to recreate a strategic power that Europe had traditionally been under the garb of an economic union.

I am however not inclined to subscribe to the theory of "Rise of Empire". Consequently, I also do not agree with those who fear an all out war involving Europe or Japan in foreseeable future. I believe that a full war needs "truck loads of youth". With "bed loads of old and infirm" people Europe and Japan cannot afford to go to a full war.

Some other may consider it desirable in order to correct the debilitating imbalances in the Euro area economies. However, considering the long history of rivalry and mistrust between the south and the north Europe, huge economic inequalities and social divergence between the peripheral and the core, thoroughly clouded economic outlook even in the medium term, there seems is little chance that a consensus could be reached.

So, at best the thoughts of President Hollande could evoke some academic discussion of no use, like the one I am doing here!

However, looking at the behavior of political parties in India, one can say that they are trying hard to seize on Indians' disenchantment with national institutions.

By denying consensus on critical economic issues, the politicians may be destroying the future of a whole generation.

And by jeopardizing the functioning of the enforcement agencies and law and order machinery, they might also be endangering the present of citizens.

Keep eye on the new dawn

Thought for the day

"Death and life have their determined appointments; riches and honors depend upon heaven."

-          Confucius (Chinese, 551-479BCE)

Word for the day

Petrous (adj)

Like stone, especially in hardness; stony; rocky

(Source: Dictionary.com)

Malice towards none

Why media loves to stalk Virat and Anushka these days?

Who does actually care?

Keep eye on the new dawn

Continuing with the theme "To Micro from Macro", I would like to clarify that in my view we are still some distance away from a secular bull market in Indian equities. However, it is likely that the next cyclical recovery that is expected to shape up in 6-12 months may lay a solid foundation for such bull market. So the positioning for this cyclical recovery has to factor in the continuation of good times, of course with material rise in volatility.

I have been rather insistent that the bull market in Indian equities will commence mostly due to domestic reasons. The global factors, primarily liquidity and soft commodity prices may provide some extra impetus.

Therefore, the positioning has to be based on domestic growth drivers. I would therefore suggest the following areas for finding future leaders.

(a)   Industrial companies with market and technology leadership, strong brand equity and access to global markets. Solution companies rather than product companies are more preferable as they can sustain margins through pricing power and better customer loyalty. The companies with substantial operating leverage in this space are more preferable.

(b)   Consumer companies both in staple and discretionary space which may benefit from rise in consumption demand, stable global economy, weaker INR, and lower commodity prices. Again companies with material operating leverage are preferable.

(c)    Local units of global corporations that may see larger participation through more investment, hike in stake or transfer of manufacturing operations for regional exports.

(d)   Financials will inevitably participate in any bull market. Reduced financial stress, better yielding bond portfolio, higher credit demand, geographical spread due to deeper financial inclusion efforts, and recapitalization are some ideas that will drive value of financial stocks higher. However, as a matter of strategy we are circumspect about the PSBs. I therefore prefer private sector lender.

       Public sector banks may though be better prospects for a short term trade. I would though stay at the top end of this spectrum.

(e)    One of the primary premises of our bull case is soft commodity prices. I would therefore not suggest any global commodity exposure. Domestically however cement could see a major spike up due to better utilization rate. Financially unleveraged large players with good operating leverage could be looked upon. I prefer regionally diversified companies to those whose operations are contained in smaller geographies.

(g)    The exporters especially IT and pharma should continue to do well. A correction due to cyclical strength in INR would provide a good entry point.

I usually do not get into the midcap - large cap debate. However, some relatively smaller companies that have potential to become big due to material capacity expansion, innovation and better resource management always present great opportunity to optimize portfolio return.

Nifty breaks the shackles. How far will it travel?

Thought for the day

"A gentleman would be ashamed should his deeds not match his words."

-          Confucius (Chinese, 551-479BCE)

Word for the day

Fogdog (n)

A bright spot sometimes seen in a fog bank.

(Source: Dictionary.com)

Malice towards none

The Congress' strategy is intriguing.

They are just busy cutting the BJP's line short instead of drawing a bigger line of their own.

The whole campaign is centered on the theme - "whatever we did bad, you are doing worse"!

Nifty breaks the shackles. How far will it travel?

Nifty completed a bullish reverse head & shoulder pattern last week. However the volumes and volatility was much lower indicating slower momentum and lack of conviction.

It is therefore less likely to show the kind of short covering and buying momentum seen usually seen post such bullish breakouts.

Infosys results this week may be a key trend decider. A close above 1060 for Infosys may lead NIFTY into its next resistance zone of 8865-8910.

This morning this looks like a likely scenario.

A close below 8470 only would terminate the current upmove.

The moot question however is will Nifty break past its previous all time high recorded earlier this year.

How long this macro trade can drive the equity returns?

Thought for the day

"Preach the Gospel at all times and when necessary use words."

-          Francis of Assisi (Italian, 1182-1226)

Word for the day

Foison (n)

Abundance, Plenty

(Source: Dictionary.com)

Malice towards none

What happens when you spit at the Sun?

How could someone defame me?

How long this macro trade can drive the equity returns?

Wednesday morning the financial markets appeared quite relieved and cheerful. Grexit concerns out of way for now and prospects of further reduction in energy cost on resumption of normal supplies from Iran charged the bulls and bears equally. Bull traders were motivated to take fresh positions as the benchmark indices crossed some key technical resistance levels and bears were pressurized to reduce short positions.

This all occurred despite consensus on poor corporate performance and worsening political landscape clouding the key legislative business like GST and Land Acquisition Bill.

An analysis of the Indian equities' performance in past one year makes it clear that the trade has so far been mostly on the macro side.

Improvement in fiscal conditions has mostly been driven by cut in government's social and administrative spending, lower energy subsidy, delay in implementation of national food security law, higher service tax and higher road cess on fuel sale, and asset sales (including spectrum and coal).

The current account looks better primarily due to lower crude bill, lower capital goods imports, lower gold demand, and higher remittances on rising rate differential.

Retail inflation appears under control - courtesy some deft market management, crash in global food prices, high base impact and to some extent due to moderation in demand. Wholesale inflation is in deflationary mode for past eight months primarily due to lower demand, lack of pricing power with manufacturers, and issues with the construction of the price index itself.

The credit demand is at multiple decade low. Consequently the rates are trending lower. After a gap of many years the real rates are now positive - a good omen for arresting the declining domestic savings.

The macro trade has also been driven to a large extent by the relative strength of Indian economy and political establishment as compared to other emerging markets. Indian currency has been rather resilient as compared to most emerging markets. The growth has collapsed in commodity driven emerging markets (e.g., Brazil, South Africa, Chile, Venezuela etc.) due to global economic slowdown. Many emerging markets (e.g., Indonesia, Thailand) have witnessed political and civil unrest. Recently, Chinese equities have corrected majorly sparking fears of collapse. This may also lead to little higher preference for relatively stable Indian markets amongst global investors.

However, the question will remain "how long this macro trade can drive the equity returns?"

At some point in time, the traders will become pious and try to invoke investment fundamentals. Then the corporate earnings and micro economic conditions would be evaluated at their face value.

This in my view is both an opportunity and threat for the Indian equities. If macro strength finally manages to permeate through the corporate performance, we may see a massive rise in the investors' interest in Indian equities leading to a bubble like condition in prices. Else, the correction is as far as the next negative headline.

Over to "Lift"

Thought for the day

"It is not fitting, when one is in God's service, to have a gloomy face or a chilling look."

-          Francis of Assisi (Italian, 1182-1226)

Word for the day

Magniloquent (adj)

Lofty or grandiose in speech or expression; using a high-flown style of discourse; bombastic.

(Source: Dictionary.com)

Malice towards none

Do you think the Italian Marines accused of murdering an Indian will (could) ever be put to justice in India?

Should all our politicians just draw a lesson from the episode and let it go.

Over to "Lift"

As of this morning the Grexit has been replaced in cold storage and Iran seems to have got a deal. The global herd of professional traders shall be aggressively looking for the new goose to chase. The most likely candidate is the 'Lift" by the US Fed.

"Lift" is prominent in the discussions since the completion of tapering in October last year. The lines are drawn and people are well positioned on both the side. Trades could occur with ease and abundance.

It is widely accepted that this is an exceptional measure with a definite life span. Consequently, the debate over ending zero rate regime in US is mostly focused on the timing rather than rationale of it. In my view, the sooner it occurs, better it would be for US as well as global economy.

I find the Fed's contention of the decision to "Lift" being data dependent farcical. It is well accepted that the "normalized" level of economic growth, employment and prices in the current circumstances cannot be benchmarked to historical statistics.

In particular for US, it might take a decade, or even two, to normalize the employment conditions. The people, who lost employment in the aftermath of blow up of financial crisis in 2008, may not be skilled or young enough to take up jobs in new avenues. Besides, lower returns on pension funds might have forced lot of people out of retirement to take up jobs not requiring tech skills. The lower end of the job spectrum may thus be overcrowded and likely remain so for quite some time - keeping effective unemployment and wage levels low.

This trend will have a direct bearing on the economic growth in terms of lower private consumption. However, going by the current trend, the government's fiscal conditions may improve materially in next 5yrs and government spending may pick up thereafter.

Lower energy prices are increasingly becoming tricky for US. The opinion is divided as to the cost and benefit of lower energy prices on overall US economy, considering the huge investment made in shale business over past one decade and given that it accounts for a major part of incremental employment.

The incremental strength of USD, consequent to "Lift" and persistent weakness in EUR and JPY, could be yet another cause of concern for US exporters.

I am not taking any side in this "Lift" trade. I believe that like Greece, there are no black swans hiding behind this cloud also. So no major surprises. I am personally expecting an accelerated "lift' initially (may be to 1.5%) followed by a rather longer pause.

I do not see it causing much disruptions in the global markets, except for a last bout of USD carry trade unwinding causing some volatility in high yield markets. Indian bonds could be at the receiving end this time.

The financials will give a last opportunity to buy cheap. Highly indebted infra players would continue to remain in "no-go" zone.

About feudal lords and a monkey

Thought for the day

"If a superior give any order to one who is under him which is against that man's conscience, although he do not obey it yet he shall not be dismissed "

-          Francis of Assisi (Italian, 1182-1226)

Word for the day

Mimesis (n)

Imitation or reproduction of the supposed words of another, as in order to represent his or her character.

(Source: Dictionary.com)

Malice towards none

May I seek a Fatwa from Ulema that only Rozadaar people have a right to Iftar. To everyone else Iftar is Haram!

About feudal lords and a monkey

This week the legendary artist and my all time favorite Guru Dutt would have turned 90. His classic movie Sahib Biwi Aur Ghulam vividly depicted the decline of a feudal family, which could not manage its affairs in accordance with the evolving realities in post independence era.

The feudal lords continued with their extravagant lifestyle when their primary source of income was drying up. Pain, misery, anguish and vanity was all that got left.

To me the story is resonating in the present day Europe. The European power began to decline sharply in post war era. The huge income drawn from erstwhile colonies in Asia, Africa and Latin America dried up fast. The huge loss of youth life in the war could never be replenished. Socialism replaced monarchies. The genius, research and innovation that heralded the era of renaissance and of industrial revolution since 18th century started dispersing across Atlantic to US. The Asian enterprise (primarily Japan, Korea and China) snatched a lot of initiative and the market.

The consequence was crippling labor unions, consistently rising wages and state welfare spending, diminishing tax revenues and ever rising public debt.

The common market and common currency was to my mind an experiment to collectively protect the slithering market share and geo-political importance of individual countries. The idea might have worked partially. However, presently, the vast socio-economic imbalances within member states more and more appear accentuating the problem rather resolving it.

I am inclined to join the school which believes that European Union is inherently unviable and mostly a failed experiment.

Greece to me is the monkey chosen for clinical trials to test the eventual disintegration of EU. A successful Grexit followed by internal normalcy in Greece over next 5-7yrs, would provide a platform for exit to other countries suffering due to a relatively stronger common currency. On the other hand the failure of this clinical trial would not cause much disruption and Greece will be kept within the Union with even larger support. The round one of trial has of course failed. 

The long term sustainable solution to the problem would only come through extensive structural reforms, which includes immigration reforms, labor reforms and subsidy reforms.

In simple terms, the salvation lies in cutting expenses and raising income to reduce indebtedness. Raising income may not be an option in the short to medium term, given the higher dependence ratio in demography, and falling employment opportunities due to technological obsolescence and highly subsidized farm sector. So we come to cutting expenses. That essentially means cheaper drugs, cheaper clothes, cheaper travel, and cheaper workers etc. or in other words India, Bangladesh, Sri Lanka, Philippines, Indonesia, et. al. I would say more of India, because we share the same education, legal, and political system.

In the meanwhile I am not bothering about the monkey on the experiment table. Those in position of power palpably not interested in the success of this clinical trial as yet.

Domestic investors hold the fort amidst global rout

Thought for the day

"Start by doing what's necessary; then do what's possible; and suddenly you are doing the impossible."

-          Francis of Assisi (Italian, 1182-1226)

Word for the day

Quixotic(adj)

Extravagantly chivalrous or romantic; visionary ,impractical, or impracticable.

(Source: Dictionary.com)

Malice towards none

What the options with Pakistan are but to keep the dialogue open!

Domestic investors hold the fort amidst global rout

The month of June witnessed about 1% fall in benchmark indices. In July YTM benchmark indices are almost unchanged. However, a further analysis of market internals would highlight that midcap and small cap have continued to outperform the benchmark indices even when institutions have withdrawn to fringes.

June'15 witnessed the lowest turnover in a year in the cash segment. The average trade size also was the lowest, indicating that it is mostly smaller investors who are holding the fort in the market.

The greed obviously is still dominating sentiment. The persistently lower volatility suggest that the global events have not deterred the domestic investors as yet.

It is clear that the Indian markets are in no hurry to follow China.

 

 

The perfect storm

Thought for the day

"Our insignificance is often the cause of our safety."

-          Aesop (Greek, 620-560BC))

Word for the day

Peacock (v)

To make a vainglorious display; strut like a peacock.

(Source: Dictionary.com)

Malice towards none

Congress lost a lot of regional Satraps between 1991-2014 due to death, dissent or dominance.

Do we see the same path for BJP in 2014-2024?

 

The perfect storm

Many global wealth reports written over past six months may have already become irrelevant. The staggering statistics of wealth creation in China that overwhelmed the global financial community stand completely destroyed.

Stand destroyed simultaneously is the facade of "all is well" in the global financial system that was meticulously built by the powerful central bankers through adoption of "non-conventional" policy measures post Lehman collapse in the summer of 2008.

As of this morning, the global financial markets are standing at crossroad.

It is highly probable that European community finds a way to live with Greece for some more year, Chinese authorities are able to stem the panic that has set in deep into investors psyche, and Iran deal is finalized to enhance the chances of peace in middle east and stability in global energy prices.

However, no one would like to rule out the probability of market getting caught in perfect storm caused, inter alia, by the following.

(a)   Political turmoil that would erupt in Europe if the Greece has to be finally ejected out of the Union. The socialist forces within Europe may see this as existential threat and endeavor hard to strengthen their grip on administration as well as businesses.

(b)   Financial turmoil that a Grexit would cause in Euro area bonds (especially Spain, Italy and French bonds). The bonds of these large economies with unsustainably high indebtedness have seen stupendous rally in past few years. A risk-off scuffle could make these market illiquid, in spite of "whatever it takes" resolve of ECB.

(c)    Economic turmoil that a hard landing in Chinese economy would cause in global commodities and financial markets. Complete collapse in commodity demand, higher inventory carrying cost and lower import demand from China would disrupt a large number of economies.

(d)   Emerging market turmoil caused by a unduly stronger USD, sharply lower global trade led by collapsing demand and poor liquidity. Weaker currencies may rake specter of hyper inflation in many import dependent economies.

It would be totally naive to suggest that India will remain insulated from all this turmoil.

1.    Our already struggling export sector will face serious demand contraction if Chinese and European demand contracts.

2.    Our commodity producer will find it difficult to survive in an environment where industrial demand is contracting (due to poor export demand) and imports are becoming materially cheaper.

3.    The manufacturing sector may benefit to some extent from lower commodity prices. But most of the benefits would be offset by lower demand and underutilization of capacities.

I am happy to let go the trade in large commodity consumers like tyres and paints.

Who wants another Shakespeare

Thought for the day

"Put your shoulder to the wheel."

-          Aesop (Greek, 620-560BC))

Word for the day

Telegnosis (n)

Supernatural or occult knowledge; clairvoyance.

(Source: Dictionary.com)

Malice towards none

Good to know that India's food safety standards are much higher than UK and Singapore.

Kudos FSSAI!!!

Who wants another Shakespeare

 

Admittedly I am just an amateur reader of history and claim no authority to comment on it.

Nonetheless, from the few pages of history of human civilization I have occasionally flipped over I could vividly make out that till a few decades ago the state played the primary role in promotion, encouragement and financing of the pursuits of excellence in the fields of art, science and technology. The development of commerce was left primarily to the private entrepreneurs with state limiting its role to providing basic logistic infrastructure.

In recent decades however the paradigm has shifted. The states have engaged themselves fully in the promotion and management of trade and commerce. The pursuit of excellence in the fields of arts, science and technology has been left to the private citizens and entrepreneurs.

Consequently, the work in the fields of art, science & technology has acquired a distinct commercial character. Mostly, these fields are now pursued for immediate economic benefits rather than for the larger benefits of humanity in the interest of posterity.

Our current days heroes are market economists, stock market investors, film stars, professional sportspersons who mainly play for money, pop singers, car & mobile phone designers and pulp fiction writers.

Few miss the likes of Shakespeare, Aristotle, Plato, Galileo, Leonardo da Vinci, Beethoven, Varāhamihir, Panini, Kautilaya, Kalidasa, Ramanujan, et. al.

Few would want another Taj Mahal to be built. Many would pray that no Picasso is ever born so that the commercial value of their art possessions does not diminishes.

Technological evolution is incremental and mostly driven by immediate economic considerations. Music, food, architecture, literature, politics, and other arts are also driven more by markets rather than purely by the pursuit of excellence.

Many may like to completely or partially disagree with me on this. I respect their stance. Nevertheless, I am convinced that under the extant political and market dynamics the global (including India) economic growth will continue to be slow, imbalanced, unsustainable and volatile.

Reading economic history in isolation will not help the cause of investors. Trust me 2015 is not 1930 and 2020s will not be 1950s.

British crown may not have enough money to fund fundamental research and a strong army that will reshape the global trade and commerce. Japan may not dominate the engineering prowess. US universities may not continue to sponsor scientists from across the world. An odd Apple and Google may continue to enrich couple of million people, but nothing beyond that. Natural calamities and water & food shortages will kill more people than the modern medicine could save.

Those claiming that India and China would do sufficient to fill the void created by diminishing spending of developed countries on pure sciences and arts, may please mind their financial security.  ...more on this later

Consumerism, markets, aspirations and adhocism

Thought for the day

"A liar will not be believed, even when he speaks the truth."

-          Aesop (Greek, 620-560BC))

Word for the day

Whodunit (n)

A narrative dealing with a murder or a series of murders and the detection of the criminal; detective story.

(Source: Dictionary.com)

Malice towards none

New Wonder of the world!

The dispensation responsible for one third of the administration of Delhi needs US$90mn to tell people what has been done to make their life better in past five months!

Would people not know by themselves if their life becomes any better?

Consumerism, markets, aspirations and adhocism

A vacation in serene hills of Garhwal Himalaya turned out to be revelation of sorts. Though I always had this slight inclination but picture was never so clear.

I often doubted the projections of India's growth potential by economists and government authorities. The potential that has been seldom accomplished in past seven decades needs to be judged with a great deal of suspicion.

To make the matter even more complex, the evaluators comprising of economists, retired bureaucrats, market analysts and investment strategists etc., have often held the government responsible for the this consistent "below par" performance of the economy.

During the 900km drive and four days in a camp in secluded forest area I got convinced that the "economic growth potential" as projected using mechanical economic models is mostly illusionary. The growth and development projected through these models cannot be accomplished without pre-existence of certain civic and social conditions.

I am confident that it is the people of India who are constricting the economic growth and development. The government and administration are only some of the people who usually after making some small effort decide to join the people in their civil non-compliance. Being in a position of trust, they usually are successful in taking pecuniary advantage of the disparateness and pervasive non-compliance in the society.

Consider the following examples to understand the point I am trying to make.

(A)        Driving on NH-58 (Delhi-Badrinath) at night, I observed that (i) most state transport busses plying on the road did not have a working tail light or break light; (ii) cyclists were carelessly cycling on the main road without any protective headgear, reflector or light; (iii) trucks were commonly carrying iron rods hanging well outside their vehicles and no caution sign/light or reflector; (iv) pedestrian were crossing the highway carelessly; and (v) bikes and tractors were freely driving against the traffic to avoid a long U turn.

Discussing the phenomenon with many drivers on the food outlets all along the highway, I found that the immediate outcome of all this is that this slows down the traffic and keeps the drivers in constant fear of accident often resulting in high stress, drunk driving and violent outbursts.

However, the more serious consequences are that (a) after a while everybody stops following the traffic rules and general non-compliance & tendency to cut corners permeates deep into the behavior; (b) the value of human life diminishes and social violence gains acceptance; (c) the disregard for "right of way", translates into the disregard for "right to life".

(B)        The staff of civic authorities is perhaps never trained to value human life and time. They bother least about the inconvenience caused to fellow citizens by the carelessness and apathy.

After a repair job, they often leave the debris on road or do not patch the hole dug on the road for carrying repairs, causing traffic snarls, endangering life of travelers at night. They take weeks to do a job that could be done in hours.

The consequences is frustration, stress, and anguish. The outcome is violence, deep disregard for civic courtesies and compliance norms and tendency to cut corners at the expense of fellow citizens.

(D)        A hike to the famous Surkanda Devi temple, near Mussoorie was frustrating. The entire path was littered with plastic wrappers and bottles. Considering that this temple is mostly visited by the local people, it was really saddening.

The people of the region are known for their struggle to save environment. Famous Sunderlal Bahuguna carried out his movement to save trees and Ganga (from Tehri dam) here. Now these very people threatening the environment and embracing mindless consumerism would certainly constrict the growth and development.

(C)        The ‘jugaad’ mindset has tenaciously constricted the vision of an average Indian entrepreneur. Except for a handful of Indians, most of whom have the benefit of studying and/or working overseas, not many have thought about scalable business models.

‘Jugaad’ in economic field is proving to be as dangerous as in personal (like self medication) and political (caste and religion based politics, adhocism in key socio-economic policies etc.)

The ‘jugaad’ mindset reflects poorly on almost every aspect of the socio-economic life in India. This has severely impacted the pursuit of excellence, a hall mark of Indian art, culture, engineering, architecture, industry till 19^th century, at least. Today, “Quality” is something India and Indians are not particularly known for globally.

As said on many occasions earlier, for my investment strategy, I presume a slower ~5-6% (old series) average growth for next decade with rise in mindless consumerism, policy adhocism, dominance of markets and unleashed aspirations.

I would not bother too much about struggle for survival of the bottom half of the pyramid, insofar as the construction of my portfolio is concerned. And I do not expect any major civil unrest, presuming that all Indians will continue to work for furtherance of their personal agenda only. About National Interest - that bird perhaps got extinct on 15 August 1947.

On Greece, I find it sufficient to quote a dear friend:

"Personally I think Germany will buckle under pressure from IMF and US. Between worries of a contagion and the impracticality of kicking Greece out of Eurozone and US worries of a left wing socialist fire in Europe fed by Russia they will arm twist Merkel and Troika to take a big haircut.

But that emboldens the anti austerity wing in Europe even more. All the left wing anti austerity chaps in Europe will have their tails up, especially in countries with high youth unemployment, viz., Italy, Spain, Portugal and France.

We have just seen Season 1 of a six part House of Cards. It's going to  be a long and messy."

 Pic source: Twitter #JugaadNation