Bharat Rakshak

Rahulsidhu

Re: monetary transmission Let's say that the banks are unable to cut rates due to their funding costs being too high. What the RBI can do is offer a term repo facility to cheapen bank funding costs - open two or three repo windows (sovereign, quasi-sovereign, corporate) and offer funding up to 6mths...

Rahulsidhu

A lot has been written recently about how global bond yields are extraordinarily low and this is a golden opportunity for India to issue overseas bonds to take advantage. But I want to propose an alternative hypothesis: The global bond rally is a decades long secular up-trend, and it is not so much ...

Rahulsidhu

I watched a bit of the post meeting Q&A. It was just painful to watch. In a response to a Q about why real rates are > 2%+, the gov. just mumbled something about closing the output gap. I would love to see the analysis they did which said they need to cut 35 in order to close the output gap but ...

Rahulsidhu

RBI is behind the curve. Both them and Govt. are underestimating the slowdown.

Rahulsidhu

One thing to keep in mind when thinking about the trade war b/w US & China - things are not how they seem on the surface. Just a few weeks ago, there was the meeting in Osaka and a sense of general optimism in the markets. But behind the scenes, things had worsened. Right now, things are looking...

Rahulsidhu

IMO, the situation is not so simple. What has come of the trade war so far? China is countering the tariffs by devaluing its yen. What's the US going to do? Devalue its own currency? It can't because it is the reserve currency. How does that stop the US from buying foreign currencies? This is a ver...

Rahulsidhu

Worth keeping in mind. I think this is goods trade only.

Rahulsidhu

rahulsidhu ji the chart used by you are from the article linked hereunder. there are a few other illustrative charts also included in the article https://timesofindia.indiatimes.com/business/india-business/five-reasons-why-the-economy-is-slowing-down/articleshow/70497728.cms the article is quite in...

Rahulsidhu

This chart mixes yearly and quarterly numbers but shows the trend well. (sorry i don't know the source, or would have credited) https://pbs.twimg.com/media/EBB9r8-VAAAY_hR.jpg:large Q1 GDP growth is likely to be quite weak as well, probably below 6%. Projections for the full year are generally aroun...

Rahulsidhu

A window into the govt's thinking. It's not a pretty picture

Rahulsidhu

Suraj wrote: GoI is also trying to fix this figure - falling gross domestic savings and especially private corporate savings has been a major reason for lack of growth.

I would argue that the causation is the other way around. Will explain in a later post hopefully.

Rahulsidhu

I'm not sure how you interpret the M3 long term trend as linear. The 'max' view of the data shows that the graph is parabolic. Sorry, should have been more clear - the 1-year and 5-year trends are quite linear. There is an option of adding a trend line and the 1 year and 5 year match it - there is ...

Rahulsidhu

In the last few days, have seen or been a part of several conversations that inevitably go roughly like this: "oh no, economy going down the drain" "yeah, consumption falling and no one ready to invest" "there is no way out. what can anyone do" "maybe the govt. cou...

Rahulsidhu

I never claimed to be an authority. If you had the intellectual capacity to engage with my arguments, I would have happily explained or changed my own views. This personal attack is rather tasteless, so will not respond to you in the future. My only purpose in posting here is to challenge some commo...

Rahulsidhu

Here is the way I look at borrowings: ... Since "money" is a limited quantity, the net will be rise in interest rate for borrowings and fall in interest rates for saving... Incorrect. Money is not a limited quantity. Neither is wealth, which is a distinct concept. I am not trying to be sn...

Rahulsidhu

Is this just kite-flying or are we seriously tracking back on the plan to issue foreign currency bonds? https://www.reuters.com/article/india-borrowings-overseas/update-1-india-pms-office-wants-finmin-to-restudy-issuing-overseas-sovereign-bond-sources-idUSL4N24Q2W5 The proposal to raise funds via o...

Rahulsidhu

Suraj, Maybe the difference between London and the Asian cities you mentioned is building permissions? All those cities ample residential and office space due to lots of hi-rises everywhere. London OTOH is mostly marked as heritage areas, and thus CBDs were needed for office space especially. I agre...

Rahulsidhu

In the US, a new way of thinking about economics and money is gaining popularity, known as Modern Monetary Theory. It is now going international. https://www.bloomberg.com/news/articles/2019-07-26/randall-wray-modern-monetary-theory-is-going-global?srnd=premium One of MMT’s core arguments is that a ...

Rahulsidhu

^^ my simple point was that if India is a net exporter of services, then profit shifting would lead to understatement of the services deficit, not overstatement. Anyway, let's move on, its getting OT.

Rahulsidhu

Happy to see this being said: https://swarajyamag.com/economy/its-the-economy-stupid It is by far well recognised that the economy is in trouble, and that growth in the first quarter of this financial year is likely to be well below 6 per cent. The Union Budget tried to address some of the challenge...

Rahulsidhu

Well, theoretically, deficits can be over stated if US companies underreported exports to India, from the US. Let us say there is a Microsoft development centre in India. This centre has to absorb let us say $ 100 as its share of head office (Redmond in Washington State) overheads in its operations...

Rahulsidhu

The opportunity here is for India and US to trade less w China (which runs giant surpluses against both while being a strategic competitor) and trade more w each other. I don't think US wants more trade with India or for that matter with any other country as substitute for trade with China. He is t...

Rahulsidhu

^^ Yes, including goods and services both. From the USTR page: The U.S. goods trade deficit with India was $21.3 billion in 2018, a 7.1% decrease ($1.6 billion) over 2017. The United States has a services trade deficit of an estimated $3.0 billion with India in 2018, down 32.5% from 2017. TBH i am n...

Rahulsidhu

schinnas ji, I think yours is a good take, and I agree for the most part. The bitter pill for India here is that we gain nothing in return. We are losing billions by not buying oil from Iran to adhere to unilateral Amreeki sanctions and be in Trump's good books. We gain little by buying more expensi...

Rahulsidhu

The IMF has revised down growth projections for India in its July update. India’s economy is set to grow at 7.0 percent in 2019, picking up to 7.2 percent in 2020. The downward revision of 0.3 percentage point for both years reflects a weaker-than-expected outlook for domestic demand. https://www.im...

Rahulsidhu

I wonder what happened to the radioisotope thermoelectric generator being 'mulled' back in 2015. That would have kept things warm and comfy! https://hardware.slashdot.org/story/15/09/14/2351237/india-mulls-using-nuclear-power-for-its-chandrayaan-2-mission-to-the-moon The moon would actually be an e...

Rahulsidhu

An increase in government borrowing runs the risk of flooding the debt market, while making it expensive for companies to borrow, according to outgoing Reserve Bank of India Deputy Governor Viral Acharya. In a lecture shared by the RBI late on Monday, Acharya said India’s borrowing relative to its ...

Rahulsidhu

https://twitter.com/CNBCTV18News/status/1153176602894721025 Interesting point of view by this interviewee. I can't really add anything but it does seem like the budget planners didn't really understand the ramifications on financial investors this surcharge hike will have. Haven't done the numbers, ...

Rahulsidhu

^ Need to distinguish between public and private debt as they are qualitatively very different. While private sector debt builds instability into a system, public debt is an instrument of stability. It provides a safe asset for investors. As for UPA's deficit spending, I will repeat: how you spend i...

Rahulsidhu

replying to post on PRC econ. thread: Agree. The fears of a debt/financial crisis in China are overblown for precisely this reason -- the line between public/private sector is not so sharp and the govt can effectively write off public/private sector debt to the extent needed. There are two potential...

Rahulsidhu

Rahulsidhuji, nice explanation. But is it not possible the exchange risk is what gets factored in the local sovereign ratings? It is for the foreign investors primarily who can also invest in the local currency denominated bonds right? So if your argument is for the local buyers of government paper...

Rahulsidhu

Rahul, Not sure why you think people and economists misunderstand national savings which is elementary economics 101. But what You are trying to explain is called money velocity and related advantages of it. The velocity depends on efficiency of the economy and its capped by the inflation target of...

Rahulsidhu

My understanding of country/national debt is that it changes country to country. Capacity of debt depends on the debt holders. Japan has several x of its gdp in debt and still enjoys AAA ratings while Pakistan is junk rated at well under 100% of gdp in debt. Yes, it depends on the payback capacity....

Rahulsidhu

Nihat wrote:In which case, is the governments obsession with fiscal prudence misplaced

Yes, definitely. Please see my earlier posts on this thread a couple of pages up.

Rahulsidhu

cross posting from PRC economy thread: China’s debt at 303% of GDP, 15% of global total: Report. A key gauge of China's debt has topped 300% of gross domestic product, according to the Institute of International Finance (IIF), as Beijing steps up support for the cooling economy while trying to conta...

Rahulsidhu

China’s debt at 303% of GDP, 15% of global total: Report. A key gauge of China's debt has topped 300% of gross domestic product, according to the Institute of International Finance (IIF), as Beijing steps up support for the cooling economy while trying to contain financial risks. The thing with Chi...

Rahulsidhu

Just looking at IMO results data, did a quick average rank calculation for the last 10 years (2010-2019) CHN 1.70 USA 2.10 KOR 4.30 RUS 5.20 PRK 7.43 SGP 8.30 THA 9.00 TWN 11.20 VNM 11.40 JPN 11.60 IRN 13.9 CAN 14.5 UKR 14.8 UNK 16.4 ROU 17.2 AUS 18.7 HUN 19.5 TUR 19.7 SRB 21.6 ITA 22 POL 22.8 GER 2...

Rahulsidhu

Here is an easy problem - Can you find at least one odd factor of (2019^8 +1) (Without using a calculator/computer). I managed it with a hit and trial approach: My first thought was to try and cast it in a form similar to Fermat's little theorem: 2019^8 = -1 (mod a) and we are looking for a. To get...

Rahulsidhu

IMHO this article is an example of how this whole debate is being handled the wrong way. It is not a question of rich investor class vs poor working class. To frame it thus is not only self-defeating, it is objectively wrong. Another example: But if we want to build the infrastructure of the countr...

Rahulsidhu

Rahulsidhu: what sort of unorthodox approaches would you recommend the government follow ? Could you suggest some particular examples in a little more detail than a line or two, if you have time ? Suraj, actually what I am suggesting is not unorthodox at all, it's the oldest trick in the book -- fi...

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