Sunday Posts

I am in India (again) and have the opportunity to follow a conversation about teaser loans, which, in my mind, goes on to show the madness of middle class economics. ( Read the news here ) Teaser Loans are loans offered below the base rate (which is 9.70% for State Bank of India, for example) and which banks to want to give out. The idea is not to change the eligibility criteria in anyway (anyone remember subprime?) but offer loans at an attractive rate for the first few years. The reason why this is back in conversation is because the Indian Real Estate market is close to breaking point. The transactions are at all time low and the inventories are at all time high. However, despite the lack of transactions, realtors refused to reduce the prices - so prices are at all time high - hoping for the Central Bank to bail them out with a rate cut. The Central Bank (Reserve Bank of India, as it is called in India), under the very able leadership of Raghuram Rajan, has so far resisted th...

It has now become a habit: A turn in the stock market, followed by as much excitement as possible on the TV and predictions on the newspapers that finally world economy is turning a corner. This then is followed by the trivial and the ordinary, politicians trying to claim that they are in charge of the future, daily chores submerging the global trends, an odd story of million dollar acquisitions breaking the gloom just a little - and then bad news returns in force, a triple-dip recession, an anaemic job market, another nation tottering on the edge of bankruptcy, a storied company shutting the door. This is followed by more claims from the politicians, that they are in charge of the future and what we need is more of the same, and then another cycle begins. This seems like events, moving forward, but the truth is that we are getting used to our own stories, that we shall get over with this recession with a bit of time, that it is all our past folly and that of governments long vote...

Joshua Cooper Ramo somewhat spills the beans in his latest article in Fortune ( read here ) and says a thing that everyone knew but was afraid of saying: That, to quote Ramo, "globalisation has a reverse gear". Citing arguments that would be familiar to those who followed Pankaj Ghemawat's work ( see his TED presentation here ), Ramo makes the case for the "inside economy", one made of local consumers and producers, that is fast filling the gap left by the receding global trade. The point is - we know this already. India, as I have argued before, rode through the tides of global recession looking inward: While its outwardly-orientated industries, IT and Aviation for example, took a beating, the ones serving domestic demand, manufacturing, retail and financial services delivered steady growth and jobs. China turned its economy slowly from an export-driven one to one aligned to local consumption - the slowing of Chinese growth, in my view, is an indicator of ...

India is facing a crisis in credibility. Right at the time when the world economy turns south, the Indian leadership continues to fiddle and confuse, and is allowing the country to drift aimlessly. After years of abundant jobs, swelling salaries and cheap credit, suddenly the Indian middle class arrives in the age of redundancies, penny pinching and ever-rising rates of interest: The end of dream may have arrived, so it feels. This may be the time we all feared: This is like putting a car on reverse while zooming ahead at 100mph. Much of the prosperity in India was only the feel-good kind, only a few people did really well. The others read about them and had a feeling of progress. Suddenly, all of that disappointment may all surface, tearing the country apart. Unless, indeed, everyone's attention could be diverted with something compelling. Like a war, perhaps. This is a classic setting for jingoist, misanthropic leader who can find someone to blame. This is not a time for reas...

Dreaming can be helpful: It keeps one awake. Particularly when life gets too dark, the possibilities dim, the opportunities obscure, the only thing left for us is a Halogen dream, which lights up everything, just like a sole lighting stand in the middle of barren fields. Jobless numbers go up and down. Greeks never really rescue themselves. People always kill people in Afghanistan. The Iranians don't tweet anymore. India loses way in corruption. Japan is still radioactive. Americans confused, busy to burn books. The leaders seem to be using up all their vocabulary, the politicians running low on charm. But life still goes on. Dreaming is the only time one can think time moves linearly, ahead. That is swiftly dispelled by morning newspapers, which seem to recycle headlines from their archives. If Fashion comes back every twenty years, the news reappears every fifty days perhaps. We still make same mistakes. We still moan the same way. We still get slaughtered, swindled,...

Crisis is inherent in Capitalism. In fact, the only good thing about capitalism is the ability to create such crisis and wash away the old and the inefficient, some people will say. This is indeed cruel system, which runs counter to natural human instinct of sympathy for the weak and the old and the like, but it is its self-healing nature, rather than its ability to create a better way of life, has kept it going when other competing systems have failed. As we are in the middle of another, worldwide, crisis, such thoughts are indeed reassuring. Many people may yet again jump out to pronounce capitalism dead, but we have been there before. Every crisis over last 150 years have been seen as Capitalism's final crisis, and every time it has emerged relatively unscathed, and looked like a stronger system, only to absolve in another crisis in a few years time.  Indeed, just like the doomsday preachers, there are others who saw the end of history at the upturns that ended recessio...

The report on Banking is due, and the bankers are trying to do what they do best: Use the back-channel to flout the rules. In a sense, the only timely thing Alistair Darling has done in his entire career seemed to be the publication of his memoir, where he reminded people how fascinatingly arrogant the banking bosses are, and how they effectively demanded a bail-out and held the British government at ransom. They are indeed at it again, and there are various conciliatory signals coming from the Downing Street.  The key issue is whether the retail banks can be separated from the investment banking operations of these huge banks, whose combined balance sheets are five times the size of UK's GDP, and therefore, they can be stopped from gambling with Jo Public's money. During the last crisis, the bankers took their 'too big to fail' position as granted and did whatever they want to do, and governments across the world, fearing a meltdown of the system, simply handed th...

If the stock markets are to be believed, the US and the European economies are on the verge of a double-dip, a second recession in three years, which will possibly, inescapably perhaps, lead into a long great depression, the second time in modern history. Whether or not that really happens, one thing is clear: If we thought the recession of 2008 would be a short-lived affair, it turned out to be far more persistent. With governments and central banks across the OECD countries frozen into a rudderless chaos, as against their initial strident response with big stimulus and matching rhetoric, we can only expect the worst now. And, if this happens, this will transform our societies completely and reshape history, remember the last great depression ended in a global war and ensuing detente lasting over six decades, and these days and weeks would go down in history when we brought this upon ourselves, through our collective senselessness. The warning signs were all there. In 2008, we kne...

The Greeks are at it again. It is not their fault: They, like everyone else, believed in the system they lived inside. But, if one cares to look, we have irreversibly reached the age of sovereign bankruptcies. This isn't new: This used to be common for princely states. But, succumbing to the same historical disease is mightily embarrassing for modern states, and for those economists who claimed to have seen the end of history. The world we live in, shall we now admit, isn't sustainable. What we are witnessing are not minor blimps, but the death pangs of an aged system which has been on life support for a long time. We are living with hope that an unlimited supply of oxygen, in this case, bail-out money, will keep us going. But we are very very close to bankrupting everyone. To understand what might be, and how we can get out of the mess, it may be a good idea to turn to, yes, Greeks. More specifically, to this ancient Greek statesman, Solon (638 - 558 BC). Solon, a worldly wise...

David Cameron is one of the more 'impressive' Prime Ministers Britain has had in the recent years. Young, handsome, articulate, someone with 'clear' views and a bias for action, who wins almost every PMQ and who has so far effectively dangled the debt question to transform almost all aspects of British life: What a contrast this makes from the unloved Gordon Brown who could get nothing done. Cameron's twelve months already make the preceding Labour years feel like ancient history, the charmed life of the boom years as well as the time of massive expansion of the 'collectivist' credo, and he seems destined, like Tony Blair, to leave a legacy, however long his coalition manages to cling together. But, like Tony Blair, this legacy may not be a positive one for Britain. Because, David Cameron, for all his posturing, is a hopeless populist, who succumb to every opportunity to please his home crowd. He has not stopped being a publicist and start becoming a Prime M...

I am signing off early. With 30 more hours to go in 2010, I already had enough. I am rather eager to start the New Year. It is always good to start a New Year in a high. And, considering that I am all too aware of the fragility of any upbeat feeling, that should be okay. This isn't like 2010, when I knew I was doomed. In fact, the last time I started a year with this feeling was back in 2006, but indeed, that was a different reality altogether. Lots of things have changed since. My life is different; my demands are completely transformed. In January 2006, I was seeking adventure, all but ready to take on an USAID funded position in Beirut, notwithstanding the pleas from my family and friends; now, I am looking forward to a few more years in Suburban London, keeping my day job and working on some new possibilities within it. The irony is: In 2006, I was all too attached to my family, with my mother still around; now, I am living the the loneliest time in my life. But, that apart, t...

It was interesting to watch London in a foreign news channel last week: The student protests got more footage than anything else. The Police Officers are already warning that we are entering into a new age of public protests. All over the Europe, this is evident. Strikes are back: Anger is back. We are no longer confined to our Post-modern cocoon of differences, but suddenly linked up in a grand narrative being played out on the streets. Back to the sixties, shall I say, and expect a re-emergence of Hippies, spiritualism, LSD, and all that? It seems somewhat similar, as conformity gagged creativity in our age, reality TV dominated the public imagination and an unpopular war is raging on for far too long. But, sixties were about the demise of grand narratives, not emergence. Sixties is when we lost the hope for humanity, and started discovering our selfish selves above everything. Sixties is, in a way, the high noon of Industrial Man, and the birth decade of post-modernism. We are indee...

The crisis that did not happen, will possibly be the way history will remember this. Indeed, if there is a history to be written still, and if the events of last two years are to get a place in the usual boom-and-bust ride of the market capitalism. I say this because this may just be the end of history, no return to life as usual may be around the corner; or, may be that's just too pessimistic, we will just be unleashed in a brave new world where such things won't matter. One would love to think the Irish crisis, which didn't happen, won't matter. After all, we have now learned to be prepared. The lessons were learned when one had to get Greece out of water, and we almost always knew Spain and Ireland were coming. It is after all, just a monetary thing, which can be solved by pumping money in. And, it was. The trouble is, it does not end there. When you pump money in, you are plugging a whole today by taking away the wealth of the future generations. Or of people's ...