After a controversial last post which I had to delete unfortunately, I am getting back to what I do best. I wanted to shift my attention to US as things seem to be getting brighter there as financial crisis is showing more and more signs of ending now. I am writing this blog after looking into few economic papers and a video of a Indian Economist where he expressed his disgrace for US. US is one of the greatest nation of the world and I personally don’t hate US but my findings show that US has not been doing things right.

US has been economic super power for past many years now. They have used all whims and fancies to show the world that there is no nation parallel to them. But  things are not same for US now as they used to be earlier. We should now understand that this might be the beginning in the end of US’ economic dominance over the world. US has  always portrait itself like best of the best with its grand infrastructure, big  military might, excellent space voyeurs but we never saw what actually US does to make economic fortune for itself. US never makes small goods, they buy it from countries like China, Malaysia and other east Asian economies. Now these countries export to US and money which they make from export, they give back to US in form of Treasury bills and other investments. So this money goes back to US and their government gives this money to people so that they can live life of luxury. Since this money not earned by US they never realise the importance. This is what caused mortgage crisis. Homes were given to US citizens without looking into any proof of their credit worthiness. How can a man earning $2000 a month pay a EMI of $10000? Since this was not the money earned by US citizens but of other countries which exported to US, so US big banks thought this would go on and on. 

Savings of countries like India and China are very high. Due to this foreign exchange reserve of China is more than $1 Trillion  and India’s around $240 Billion..but we put this money back into US because Dollar is most valuable currency of whole world. We can’t think of losing dollar because if dollar looses its value then we will loose $200 billion of India’s saving which are with US. This means we know that US is in great debt and doesn’t have any way out to get out of this debt in near future but we can’t do anything.

I have been looking into US past and future in past few days and I have found some astonishing fact  about this so called great nation.According to a economist in India US attacked Iraq not because it had nuclear arms but because Saddam was not ready to trade oil in dollars. He was ready to trade in any other currency than dollar. This was prospective danger to the US dominance. More recently US was ready to attack Iran because they were building a new OIL EXCHANGE in Iran which would trade in currencies other than US Dollar but now since Iran has stopped the construction of Oil Exchange so US is quite for the moment. It seems US is the only nation on this earth who guards its money through its military prowess.

All the nations are today addicted to US Dollar. I think we should try to reduce our exposure to US Dollar as you never know when demise will occur. It can happen in any time. Start looking for alternative. This economic recovery may not well be a real recovery because this recovery could be bringing up one more mortgage like bubble with it…be ready.

This recession was the toughest phase of life, many ever saw and many more still going through it. All of us want that this slowdown should end as soon as possible. Economist say increased government spending is best way to infuse money into the system and increase demand. This method have been successful in past. So, then why US and UK  govt  is doing so. They can’t do it because if these govts get more into debt then after a certain point it might not be possible to come out of this debt. Hence, dont try for fast growth go slow.

Now, slow recovery means more jobless addition Year on Year, more failing banks and businesses. If worst has already past then it is the time for govt around the world to improve there balance sheets. Redistribution of money from Middle East nations and China to other parts of the world need to be realized.

We can neither go fast nor can we afford slow recovery. I still think this recovery is neither V-shaped nor W-shaped but half V and half U shaped. This means first half would be a steep fall as in V, this we have already seen. Second half will be U shaped, this means recovery will be flat and will rise slowly and steadly before comming into full swing.

Image via Wikipedia

The number crunching game of economics is the only thing at boom in this recessionary atmosphere around the globe. Data is being analyzed rigorously in order to get some positive outcome but the more the data come out and more the analysis done, we get more hopeless results every time. Recently I was going through the data released by the RBI and CSO, few renowned economists in India have predicted over the growth prospects of India in 2008-2009. Things are definitely not as bright as it had been in recent past.

Real growth of GDP(market prices) would fall to 7.1% in 2008-09 from 9.02% and GDP growth at factor cost too would remain at around 7.1% in 2008-09.

Growth of agriculture and allied activities would be at 3.3% this fiscal year when compared to last year’s 4.55% growth. Industry sector which was experiencing an average growth of above 10% in last 4 years would decline to dismal 5.7% growth. IIP figures of August showed manufacturing output growth to be at 1.15% which is lowest monthly figure reported since October 1998. Outputs of capital goods have slumped to 2.3% from 20.4% immediately previous month. Tertiary sector or services will grow at 9.0% this year after enjoying a growth of above 10% every year in past three years. Per capita real GDP growth was 7.49% last year and may fall to 5.60% this time round.

Read the rest of this entry »

Image via Wikipedia

Indian corporate world has been shaken miserably with the unfolding of the Satyam misgovernance case.This has set inquires by government over the bank accounts of other major business houses in India. Let me tell you what Raju did recently is being done all around the corporate world but only thing is Satyam was involved in multiple frauds and due to this investors lost all his confidence on Satyam.

If these inquiries are carried on properly then be sure of big big defaulters ahead. And the bigger than the biggest is also among one of them,Mr. Mukesh Ambani. Recently he acquired more shares of RIL and his share in RIL rose to 49.03%. Now in last two years he has bought shares of his own company worth $12 Billion(Rs.570 billion).

Read the rest of this entry »

Image via Wikipedia

Media is supposed to be the mirror of the society. It builds the consensus of a nation over which that nation grows and develops in its culture, dynamism and intellect. But in recent years Indian Television media has put forward such a agnostic picture of themselves that I fail to understand the reason for those channels being aired and concept of media seems to be in doldrums. Democratic system of Indian Republic gave birth to a free and independent media but media has very recently downgraded itself to a new version and its not media, its Entertania(Entertainment+Media).INDIA’S FREE AND INDEPENDENT ENTERTANIA.

Recently I was in Noida discussing about Indian Media with a businessman named Sajeev Mathur. He told me about a incident which happened recently in Noida. He said that in a house in nearby sector there lived a family of three. Husband and Wife ,aging around 40, with their niece.There was some quarrel between this girl and her local guardian who were the people with whom she was living in Noida. Girl went to police station and filed a complaint against her local guardian charging the man, who was living there, of molestation and attempt to rape.This news some how reached to media people. They made their own judgment and showed the story on TV and declared those local guardians as convicts while police was yet to take action.

Read the rest of this entry »

Image via Wikipedia

Fall of Russian communism may have sent a good signal to the world and the feel of triumph for the western countries because of their belief that this would bring much needed stability to the world, but the humiliation within the former USSR is becoming evident as it tries to gain back its lost supremacy. Best example to resurgence of Russian might in post Cold War era was war with Georgia. Mr. Vladimir Putin is said to be a man from that totalitarian system which ended with lowering flag above Kremlin. Mikhail Gorbachev, the last president of Soviet Union, said "The totalitarian system has been eliminated.. free election ,free press, freedom of worship, representative legislatures and the multi party system have all become reality." US were the first to recognize and welcome the new independent and democratic Russia.

10 Years after cold war era ended Russia started to grow its economy the high growth rate and sought to regain its lost glory. But in its attempt to strengthen itself it has constantly increased its pre-cold war era activities as it gain economic power. Russia has tried to show that it has always been at par with US even after its great demise in 1991.Russia’s war in Georgia and its unilateral recognition of South Ossetia and Abghazia copied the west’s recognition of Kosovo in the Balkans, Mr. Putin said unilateral recognition of Kosovo was "immoral and illegitimate". Russia very recently developed and tried to strike a defense deal with India providing Missile Defense System when US was trying to do that.

Read the rest of this entry »

Image via Wikipedia

This is not like my typical blog on economics rather its something related to it through my personal experience. I am in a train and 10 minutes ago was really getting bored so I decided to write a post because the constant murmuring of few people did not allow me to sleep even. I then decided to hear those murmur more seriously as the topic they discussing interested me a bit. They were discussing over the topic : The role of youth in education today. This train goes from Delhi to Mussfarnagar. Delhi is off course well known but Mussafarnagar is a small town in Bihar, I have never visited it though. Most of the people are from Bihar except few like me and my friend, a couple sitting above talking continuously as the time is really running short for them and a pretty girl sitting in front me and reading 5 point someone. These people will probably drop at the Lucknow Station. Same sense of looking the way people are talking and doing has made me to derive this logical conclusion and this demarcation is so big in India that one can easily reach such conclusions. Again back to the group discussion taking place in my fellow compartment and which has gained even more energy and participation of the people around. I said i have a bit of interest on such topic so I had my own view point over this.

Read the rest of this entry »