"Reserves" are a racket setup by certain OECD countries to ensure that developing countries have to work hard to accumulate paper money they print up.
India should not ascribe to the reserve philosophy. Rather it should have its own "reserves" of crypto currencies, gold, and monetize a basket of other commodities and services that India produces.
Pakistani Economic Stress Watch
Re: Pakistani Economic Stress Watch
Saar, the ideas that you offer in your last para are not possible to implement and/or will leaded to financial suicide.
Re: Pakistani Economic Stress Watch
Neshant ji, what good is a reserve of crypto currency, gold if you can't use it to import oil during shocks? Even trusting something as fickle as crypto currency is a political, economic suicide. Crypto currency is a speculative asset at best, and it is a sound advice not to use a speculative asset as your reserve lest your own currency becomes speculative. Further, no sane foreign investor will put money in India (be it direct or indirect). What you propose will set India back by a few dozen decades.
Re: Pakistani Economic Stress Watch
It already is possible to pay for oil in cryptos.
Venezuela offered India the sale of oil at a discount in exchange for payment in its own Petro crypto-currency - which India declined.
The point is not to use the cryptos of foreign currency but to use crytos based on Indian productive output.
Unlike China, India cannot use its Rupee to pay for foreign goods as India does not produce much of what world needs.
In order to make an Indian based payment for foreign goods viable, India has to bring something of value to the table.
Cryptos which can be based on any productive output within the country is the best way to offer that value.
Paying for imports with gold would in real terms make things 10X more expensive.
Unlike cryptos which can be based on human productive labor, gold has the added feature of physical scarcity.
One thing is for sure.
Expending vast amounts of a nation's efforts to accumulate fiat paper printed up by a foreign govt for free (and which eventually will be defaulted on) is not a long term viable strategy.
Venezuela offered India the sale of oil at a discount in exchange for payment in its own Petro crypto-currency - which India declined.
The point is not to use the cryptos of foreign currency but to use crytos based on Indian productive output.
Unlike China, India cannot use its Rupee to pay for foreign goods as India does not produce much of what world needs.
In order to make an Indian based payment for foreign goods viable, India has to bring something of value to the table.
Cryptos which can be based on any productive output within the country is the best way to offer that value.
Paying for imports with gold would in real terms make things 10X more expensive.
Unlike cryptos which can be based on human productive labor, gold has the added feature of physical scarcity.
One thing is for sure.
Expending vast amounts of a nation's efforts to accumulate fiat paper printed up by a foreign govt for free (and which eventually will be defaulted on) is not a long term viable strategy.
Re: Pakistani Economic Stress Watch
^How well is using a physical asset(oil) backed crypto working out for Venezuela?
When I was younger, there was a simple rule we used to follow while playing cricket- The guy who owns the bat is the captain(and bats first). So until we own the 'bat', no point talking about becoming the 'captain'.
When I was younger, there was a simple rule we used to follow while playing cricket- The guy who owns the bat is the captain(and bats first). So until we own the 'bat', no point talking about becoming the 'captain'.
Re: Pakistani Economic Stress Watch
Whoa! For a fleeting moment I thought I was on the Indian Economy thread. My mistake.
Pakistani Economic Stress Watch
X Posted on the Terroristan Thread
All Hail the new Terroristanonomics!
‘Pakistan can address payment woes by curbing GDP growth’ - Shahram Haq
LAHORE: Pakistan can tackle its balance of payments woes by slowing down gross domestic product (GDP) growth through fiscal and monetary contraction as currently it is the only short-term solution for the country’s economic managers, suggested a research conducted by the Lahore School of Economics (LSE).
For the long run, Pakistan’s policymakers needed to develop an industrial strategy aimed at producing higher value-added export goods, it said. The argument presented by researchers was that it was the high GDP growth that caused the recurring balance of payments problem.
“The fundamental reason behind this is that there exists structural weakness in Pakistan’s economy in terms of composition of exports since a higher growth is accompanied by significantly higher imports, but only slightly higher exports,” they said.
“The reason for low export growth is that Pakistan is caught in a low value-added export production trap.”
Researchers found that there existed a balance of payments-constrained maximum growth rate in Pakistan of approximately 5%. “This means that every time the growth rate goes above 5%, the current account significantly deteriorates.”
The current account deterioration, they said, was historically caused by unsustainable level of high imports when growth rose above the 5% threshold.
Researchers also found that a change in the real exchange rate did not have a significant impact on the current account balance.
They presented some key policy recommendations. “First, with an effective exchange rate devaluation of approximately 20%, the overvaluation problem of the rupee has now been mostly resolved so there is little economic justification for further devaluation.”
It was also noted that because of inelasticity of imports and exports, the devaluation on its own would not solve the balance of payments crisis.
Second, only a sharp slowdown in growth caused by a significant fiscal (and potentially monetary) contraction will stabilise the current account in the short run.
Also, tariff increases on consumer goods, in particular luxury goods, should be strongly considered to slow the unsustainable influx of imports. In the long run, a well-defined industrial strategy is needed to help Pakistani manufacturers move from lower value-added exports to higher value-added exports.
Cheers
All Hail the new Terroristanonomics!
‘Pakistan can address payment woes by curbing GDP growth’ - Shahram Haq
LAHORE: Pakistan can tackle its balance of payments woes by slowing down gross domestic product (GDP) growth through fiscal and monetary contraction as currently it is the only short-term solution for the country’s economic managers, suggested a research conducted by the Lahore School of Economics (LSE).
For the long run, Pakistan’s policymakers needed to develop an industrial strategy aimed at producing higher value-added export goods, it said. The argument presented by researchers was that it was the high GDP growth that caused the recurring balance of payments problem.
“The fundamental reason behind this is that there exists structural weakness in Pakistan’s economy in terms of composition of exports since a higher growth is accompanied by significantly higher imports, but only slightly higher exports,” they said.
“The reason for low export growth is that Pakistan is caught in a low value-added export production trap.”
Researchers found that there existed a balance of payments-constrained maximum growth rate in Pakistan of approximately 5%. “This means that every time the growth rate goes above 5%, the current account significantly deteriorates.”
The current account deterioration, they said, was historically caused by unsustainable level of high imports when growth rose above the 5% threshold.
Researchers also found that a change in the real exchange rate did not have a significant impact on the current account balance.
They presented some key policy recommendations. “First, with an effective exchange rate devaluation of approximately 20%, the overvaluation problem of the rupee has now been mostly resolved so there is little economic justification for further devaluation.”
It was also noted that because of inelasticity of imports and exports, the devaluation on its own would not solve the balance of payments crisis.
Second, only a sharp slowdown in growth caused by a significant fiscal (and potentially monetary) contraction will stabilise the current account in the short run.
Also, tariff increases on consumer goods, in particular luxury goods, should be strongly considered to slow the unsustainable influx of imports. In the long run, a well-defined industrial strategy is needed to help Pakistani manufacturers move from lower value-added exports to higher value-added exports.
Cheers
Re: Pakistani Economic Stress Watch
^Bakistan has hit stagflation. If some 25+ Billion dollars does not come through in the next 12 months, it will start going the way of Venezuela. Only little slowly and not as abrupt and quickly.
Re: Pakistani Economic Stress Watch
with aam abdul pakis crossing over into India in droves, looking for jobs and sustenance.disha wrote:^Bakistan has hit stagflation. If some 25+ Billion dollars does not come through in the next 12 months, it will start going the way of Venezuela. Only little slowly and not as abrupt and quickly.
Pakistani Economic Stress Watch
X Posted on the Ātaṅkavadīsthan Thread
Here comes the Kashkol Beggers' Battalion!
New govt has no option but to borrow to clear growing debt: official - Khaleeq Kiani
ISLAMABAD: To hit the ground running — when it formally starts functioning this week — the new PTI-led coalition government is estimated to require an upfront settlement and restructuring of almost Rs1.9 trillion worth of liabilities and receivables of public sector entities. Debt, Debt Glorious Debt, Nothing like it to Cool the Blood! To be sung to the Tune of "The Hippopotamus Song."
A senior government official said the Pakistan Tehreek-i-Insaf government would have to make book adjustments and oversee write-offs — apart from resorting to different kinds of borrowing — to clear the stockpile of debt and liabilities of loss-making entities.
The official explained that a major portion of the liabilities piled up over time due to the widening gap between payables and receivables in loss-making companies, which is a classic example of inter-corporate circular debt. The rising debt may require a fresh liquidity of Rs600-700 billion.
That would also allow Finance Minister Asad Umar to project a higher fiscal deficit at the beginning of his term against the 4.9 per cent GDP booked in budget documents by the Pakistan Muslim League (PML-N) government. Mr Umar has already described the deficit numbers as unrealistic and has claimed that he would bring to the public knowledge data that he believes to be understated expenditures or over-stated flows.
Giving a general rundown on some of the major liabilities and receivables, the official said that power sector circular debt alone amounted to Rs1.150tr, which included Rs566bn worth of fresh flow of debt. The latter is mostly a result of short recoveries against billing, theft and line losses.
Of this, about Rs570bn is payable to independent power producers and generation companies — including the Water and Power Development Authority — for electricity they supplied to distribution companies through the National Transmission & Dispatch Company and the Central Power Purchasing Agency. The amount also includes Rs110bn in capacity payments.
Another Rs583bn circular debt is parked in a special purpose vehicle called the Power Holding Company Limited. Although a major part of these liabilities is being financed through power tariff in the shape of financing cost surcharge against loans secured from commercial banks, about Rs155bn of fresh borrowing secured during the last stretch of the PML-N government is still unfunded.
Moreover, the liabilities of the Pakistan International Airlines (PIA) are also estimated close to Rs380bn, almost 123pc higher than the Rs170bn outlay five years ago. The official said that the entire amount was not required to be paid immediately, but the airline required regular rolling over of its outstanding loans against government guarantees to avoid default. It will require a major restructuring to put the national flag carrier and its balance sheet on an even keel.
Next on the list of loss-making entities is the Pakistan Steel Mills that stands practically closed since June 2015 due to gas supply being curtailed. The mill has payable debts and liabilities of about Rs230bn, besides Rs225bn in losses. Its closure has since caused almost $10bn worth of foreign exchange loss to the nation in the shape of steel and iron imports that could have otherwise been produced at home.
The official said that even though the Pakistan State Oil was a profitable firm — and the country’s largest in terms of revenue — its receivables were more than Rs335bn as of Aug 15. The number includes a recoverable amount of Rs159bn from generation companies, Rs77bn from the Hub Power Company (Hubco) and Rs46bn from the Kot Addu Power Company (Kapco).
The official explained that the government would have to manage funding arrangements for distribution companies so that they could make payments to independent power producers, including Hubco and Kapco. Getting these funds together is critical given the fact that a mammoth Rs820bn of power recoverable bills is outstanding against both public and private sector consumers.
In his press conference on Aug 7, Mr Umar had criticised the PML-N government for presenting an unrealistic budget knowingly and recklessly spending for political purposes.
He said that the previous government had borrowed heavily, which increased fiscal deficit in the last fiscal year to 7.1pc, instead of the targeted 4.1pc. He said that at present Pakistan’s situation was dire at best and required tough decisions to correct the course for the future.
Cheers
Here comes the Kashkol Beggers' Battalion!
New govt has no option but to borrow to clear growing debt: official - Khaleeq Kiani
ISLAMABAD: To hit the ground running — when it formally starts functioning this week — the new PTI-led coalition government is estimated to require an upfront settlement and restructuring of almost Rs1.9 trillion worth of liabilities and receivables of public sector entities. Debt, Debt Glorious Debt, Nothing like it to Cool the Blood! To be sung to the Tune of "The Hippopotamus Song."
A senior government official said the Pakistan Tehreek-i-Insaf government would have to make book adjustments and oversee write-offs — apart from resorting to different kinds of borrowing — to clear the stockpile of debt and liabilities of loss-making entities.
The official explained that a major portion of the liabilities piled up over time due to the widening gap between payables and receivables in loss-making companies, which is a classic example of inter-corporate circular debt. The rising debt may require a fresh liquidity of Rs600-700 billion.
That would also allow Finance Minister Asad Umar to project a higher fiscal deficit at the beginning of his term against the 4.9 per cent GDP booked in budget documents by the Pakistan Muslim League (PML-N) government. Mr Umar has already described the deficit numbers as unrealistic and has claimed that he would bring to the public knowledge data that he believes to be understated expenditures or over-stated flows.
Giving a general rundown on some of the major liabilities and receivables, the official said that power sector circular debt alone amounted to Rs1.150tr, which included Rs566bn worth of fresh flow of debt. The latter is mostly a result of short recoveries against billing, theft and line losses.
Of this, about Rs570bn is payable to independent power producers and generation companies — including the Water and Power Development Authority — for electricity they supplied to distribution companies through the National Transmission & Dispatch Company and the Central Power Purchasing Agency. The amount also includes Rs110bn in capacity payments.
Another Rs583bn circular debt is parked in a special purpose vehicle called the Power Holding Company Limited. Although a major part of these liabilities is being financed through power tariff in the shape of financing cost surcharge against loans secured from commercial banks, about Rs155bn of fresh borrowing secured during the last stretch of the PML-N government is still unfunded.
Moreover, the liabilities of the Pakistan International Airlines (PIA) are also estimated close to Rs380bn, almost 123pc higher than the Rs170bn outlay five years ago. The official said that the entire amount was not required to be paid immediately, but the airline required regular rolling over of its outstanding loans against government guarantees to avoid default. It will require a major restructuring to put the national flag carrier and its balance sheet on an even keel.
Next on the list of loss-making entities is the Pakistan Steel Mills that stands practically closed since June 2015 due to gas supply being curtailed. The mill has payable debts and liabilities of about Rs230bn, besides Rs225bn in losses. Its closure has since caused almost $10bn worth of foreign exchange loss to the nation in the shape of steel and iron imports that could have otherwise been produced at home.
The official said that even though the Pakistan State Oil was a profitable firm — and the country’s largest in terms of revenue — its receivables were more than Rs335bn as of Aug 15. The number includes a recoverable amount of Rs159bn from generation companies, Rs77bn from the Hub Power Company (Hubco) and Rs46bn from the Kot Addu Power Company (Kapco).
The official explained that the government would have to manage funding arrangements for distribution companies so that they could make payments to independent power producers, including Hubco and Kapco. Getting these funds together is critical given the fact that a mammoth Rs820bn of power recoverable bills is outstanding against both public and private sector consumers.
In his press conference on Aug 7, Mr Umar had criticised the PML-N government for presenting an unrealistic budget knowingly and recklessly spending for political purposes.
He said that the previous government had borrowed heavily, which increased fiscal deficit in the last fiscal year to 7.1pc, instead of the targeted 4.1pc. He said that at present Pakistan’s situation was dire at best and required tough decisions to correct the course for the future.
Cheers
Re: Pakistani Economic Stress Watch
I just want Pakistan to take the loan and reveal the terms of chinese loans in great detail. Ptaa toh chale bill kitne kaa fatta hai?
Re: Pakistani Economic Stress Watch
+ 1Neshant wrote:"Reserves" are a racket setup by certain OECD countries to ensure that developing countries have to work hard to accumulate paper money they print up.
India should not ascribe to the reserve philosophy. Rather it should have its own "reserves" of crypto currencies, gold, and monetize a basket of other commodities and services that India produces.
Re: Pakistani Economic Stress Watch
When will the Paki Abduls and Faujis line up in endless lines outside shops for food, double roti or naan?
A year or two after total collapse?
A year or two after total collapse?
Re: Pakistani Economic Stress Watch
Gagan'ji., Baki faujis -> never.
Baki Abduls are already lining up for double roti., @50% of them. In 2016 itself some 40% of abduls were in 'multi-dimensional poverty'. http://www.pk.undp.org/content/pakistan ... verty.html and Bakistan has not shown any spectacular poverty alleviation in the intervening 2 years. This article goes with standard $2/day and estimates 60% in poverty https://tribune.com.pk/story/1614607/2- ... -pakistan/
Now Baki Abduls making a run for other countries, I am not so sure. What I apprehend is that first Sindh and then followed by Bakjab will 'fall' and the baki abduls from kranchi's outskirts and lawhore's outskirts will run into kranchi/Lawhore respectively OR spill over into other areas (balochistan/POK/Gilgit/Baltistan ...) and impoverishing them further.
There will be a trickle into Makkah/Barbaria and its nearby side-kicks like Jeddah/Dhabi/Doobai initially https://sitreport.unescapsdd.org/pakistan/out-migration but then if Makkah/Barbaria does not pay the ransom money to Bakistan, you will see Bakistanis boating down to Makkah/Barbaria/Dhobi/Doobai rapidly.
It will really help if in the next two years the Oil price collapses. It should go down to some 30 USD/Barrel. Then the Makkars/Barbarians will be over barrel and no dollar aid forthcoming to Bakis as ransom and Bakis boating/swimming down in droves to their shores. Some of them can show up in Indonesia or Malaysia as well.
This will be the best outcome for everybody as well.
Baki Abduls are already lining up for double roti., @50% of them. In 2016 itself some 40% of abduls were in 'multi-dimensional poverty'. http://www.pk.undp.org/content/pakistan ... verty.html and Bakistan has not shown any spectacular poverty alleviation in the intervening 2 years. This article goes with standard $2/day and estimates 60% in poverty https://tribune.com.pk/story/1614607/2- ... -pakistan/
Now Baki Abduls making a run for other countries, I am not so sure. What I apprehend is that first Sindh and then followed by Bakjab will 'fall' and the baki abduls from kranchi's outskirts and lawhore's outskirts will run into kranchi/Lawhore respectively OR spill over into other areas (balochistan/POK/Gilgit/Baltistan ...) and impoverishing them further.
There will be a trickle into Makkah/Barbaria and its nearby side-kicks like Jeddah/Dhabi/Doobai initially https://sitreport.unescapsdd.org/pakistan/out-migration but then if Makkah/Barbaria does not pay the ransom money to Bakistan, you will see Bakistanis boating down to Makkah/Barbaria/Dhobi/Doobai rapidly.
It will really help if in the next two years the Oil price collapses. It should go down to some 30 USD/Barrel. Then the Makkars/Barbarians will be over barrel and no dollar aid forthcoming to Bakis as ransom and Bakis boating/swimming down in droves to their shores. Some of them can show up in Indonesia or Malaysia as well.
This will be the best outcome for everybody as well.
Re: Pakistani Economic Stress Watch
^If oil prices collapses, that will be a relief for Pakistan too. Their main import, like us, is oil.
Re: Pakistani Economic Stress Watch
By that logic, you will never own the bat.Trikaal wrote:^How well is using a physical asset(oil) backed crypto working out for Venezuela?
When I was younger, there was a simple rule we used to follow while playing cricket- The guy who owns the bat is the captain(and bats first). So until we own the 'bat', no point talking about becoming the 'captain'.
Venezuela needs just one (major) country to take up its offer of oil for crypto exchange and it will have broken its dependency on USD markets to facilitate its oil trade.
US does not want any country cutting in the reserve racket.
Hence its threats of sanctions against foreign companies doing business with Venezuela and invasion in the case of Libya's plan for a gold backed dinar.
Re: Pakistani Economic Stress Watch
So will remittances from Gulf, Pakistanis are mostly unskilled labour who kicked out, plus baksheeh, so its a double edged sword for them.Trikaal wrote:^If oil prices collapses, that will be a relief for Pakistan too. Their main import, like us, is oil.
Re: Pakistani Economic Stress Watch
What makes you think we won't be subjected to similar sanctions? US sanction threats have made India cut oil purchase from Iran in half, even when Iran agreed to sell in Rupees. So all the evidence points to the fact that India will be hurt badly in face of US sanctions and is doing everything possible to avoid them. By bat example, I tried to explain that you follow the rules until you have the capacity to break them. Until Indian economy can easily bear the brunt of US sanctions, there can be no steps taken to diversify the reserve basket.Neshant wrote:
By that logic, you will never own the bat.
Venezuela needs just one (major) country to take up its offer of oil for crypto exchange and it will have broken its dependency on USD markets to facilitate its oil trade.
US does not want any country cutting in the reserve racket.
Hence its threats of sanctions against foreign companies doing business with Venezuela and invasion in the case of Libya's plan for a gold backed dinar.
Re: Pakistani Economic Stress Watch
Remittances aren't part of the government budget(though they are an important source of forex). On the other hand, oil purchase is an essential part of government expenses and fall in prices means more funds available with the government. Not to mention, Pakistani rupee gets stronger because of falling oil, reducing debt servicing costs. Overall impact of oil price fall will be decisively positive for Pak economy.Aditya_V wrote:
So will remittances from Gulf, Pakistanis are mostly unskilled labour who kicked out, plus baksheeh, so its a double edged sword for them.
Re: Pakistani Economic Stress Watch
Economically stressed Mohammadden Terrorism Fomenting Islamic Republic wants to help India “alleviate poverty and uplift the people” . X Posted from the Terroristan thread.
The fact however is that the Mohammadden Terrorism Fomenting Islamic Republic of Pakistan can neither materially help nor materially hinder poverty alleviation, uplift of people or any other aspect of development of India. The dire economic straits caused by pandering to the Punjabi dominated Military’s delusional quest for parity with India resulting in Pakistan having to visit the IMF, the lender of last resort for countries, yet again with green painted kaashkol in hand begging for a bailout and the puny GDP size relative to India, rule out help. Regards Pakistan’s hindrance capability, current blowback situation arising from “Strategic Asset” Jihadi Islamic Terrorists slipping the leash and sowing mayhem within Pakistan clearly shows that the price tag for hindering India is substantially higher for Pakistan herself.
No dialogue or Trading with the Mohammadden Terrorism Fomenting Islamic Republic of Pakistan till such time as there is a cessation of cross border terrorism targeting India and Indian interest worldwide, verifiable destruction of Islamic Terrorist infrastructure used to target India in Pakistan and the sighting of the cadavers of executed Islamic Terrorists targeting India like Hafiz Saeed, Azhar Masood etc. In the interim if Naya Pakistan is so keen on trading let them reciprocate India’s gesture and grant MFN Status to India as they are treaty bound to do so.
. X Posted from the Terroristan thread.For some reason the Mohammadden Terrorism Fomenting Islamic Republic of Pakistan has convinced itself that they are the veto holding Thekadaars of poverty alleviation, uplift of people and all manner of economic development in our country. Imran Khan Niazi’s above tweeted statement is yet another manifestation of this delusion.Imran wants talks, trade between India and Pakistan to resolve conflicts ………………
To move forward Pakistan and India must dialogue and resolve their conflicts incl Kashmir: The best way to alleviate poverty and uplift the people of the subcontinent is to resolve our differences through dialogue and start trading ……………….
The fact however is that the Mohammadden Terrorism Fomenting Islamic Republic of Pakistan can neither materially help nor materially hinder poverty alleviation, uplift of people or any other aspect of development of India. The dire economic straits caused by pandering to the Punjabi dominated Military’s delusional quest for parity with India resulting in Pakistan having to visit the IMF, the lender of last resort for countries, yet again with green painted kaashkol in hand begging for a bailout and the puny GDP size relative to India, rule out help. Regards Pakistan’s hindrance capability, current blowback situation arising from “Strategic Asset” Jihadi Islamic Terrorists slipping the leash and sowing mayhem within Pakistan clearly shows that the price tag for hindering India is substantially higher for Pakistan herself.
No dialogue or Trading with the Mohammadden Terrorism Fomenting Islamic Republic of Pakistan till such time as there is a cessation of cross border terrorism targeting India and Indian interest worldwide, verifiable destruction of Islamic Terrorist infrastructure used to target India in Pakistan and the sighting of the cadavers of executed Islamic Terrorists targeting India like Hafiz Saeed, Azhar Masood etc. In the interim if Naya Pakistan is so keen on trading let them reciprocate India’s gesture and grant MFN Status to India as they are treaty bound to do so.
Re: Pakistani Economic Stress Watch
Imran in a vclip when asked about helping the US in the " war on terror" in Af.
Quote:
Pak wants to be a partner for peace with the US.50K Pakistaniz have died, $80B has been spent by Pak in the Af war, the US only $20B.The country's economic situation is critical.We're fed up of being a hired gun ready to do the US's bidding.The US has to understand this....
Quote:
Pak wants to be a partner for peace with the US.50K Pakistaniz have died, $80B has been spent by Pak in the Af war, the US only $20B.The country's economic situation is critical.We're fed up of being a hired gun ready to do the US's bidding.The US has to understand this....
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Re: Pakistani Economic Stress Watch
Since when did the Porkis get $80bn let alone spend that muchPhilip wrote:Imran in a vclip when asked about helping the US in the " war on terror" in Af.
Quote:
Pak wants to be a partner for peace with the US.50K Pakistaniz have died, $80B has been spent by Pak in the Af war, the US only $20B.The country's economic situation is critical.We're fed up of being a hired gun ready to do the US's bidding.The US has to understand this....
Re: Pakistani Economic Stress Watch
Neshant, you forget; we are here (viz global economy) not only to accumulate fiat currency printed by other states but also to import technology. As China gets more technology independent, it is showing signs of developing an independent monetary policy. Until they were technology deficient and had to import technology from west, the Chinese were very busy accumulating fiat currency.
Re: Pakistani Economic Stress Watch
We can't afford to wait around for an oil-producing hyper-inflated economy who will accept our Cryptos for oil when we ourselves are mired in BOP crisis.Neshant wrote:It already is possible to pay for oil in cryptos.
Venezuela offered India the sale of oil at a discount in exchange for payment in its own Petro crypto-currency - which India declined.
The point is not to use the cryptos of foreign currency but to use crytos based on Indian productive output.
Unlike China, India cannot use its Rupee to pay for foreign goods as India does not produce much of what world needs.
In order to make an Indian based payment for foreign goods viable, India has to bring something of value to the table.
Cryptos which can be based on any productive output within the country is the best way to offer that value.
Paying for imports with gold would in real terms make things 10X more expensive.
Unlike cryptos which can be based on human productive labor, gold has the added feature of physical scarcity.
One thing is for sure.
Expending vast amounts of a nation's efforts to accumulate fiat paper printed up by a foreign govt for free (and which eventually will be defaulted on) is not a long term viable strategy.
Regarding your other point, your idea of tying Cryptos to some productive output of India does seem good on paper, but you have to elaborate in this productive output. It should be sufficiently scarce (who owns the entire supply chain?) and valuable in its demand by international community that it can bail India out in times of crisis. I can't think of any.
Also, like the other poster mentioned, we do not own the bat at this stage. IMO, the proposal would backfire as of now badly if implemented.
Re: Pakistani Economic Stress Watch
Mod Note: Stay on topic please.
Neshant, you have the Perspectives thread to peddle your economic theories. Don't clutter up other threads with the same. This is the Paki Economic Stress thread. Post on topic or you'll receive a warning. Same goes for anyone responding to off-topic posts.
Neshant, you have the Perspectives thread to peddle your economic theories. Don't clutter up other threads with the same. This is the Paki Economic Stress thread. Post on topic or you'll receive a warning. Same goes for anyone responding to off-topic posts.
Re: Pakistani Economic Stress Watch
Back to pakhanistan economic situation.
Pakistan among countries most vulnerable to dollar appreciation: Moody's
Pakistan among countries most vulnerable to dollar appreciation: Moody's
Moody's Investors Service has identified Pakistan among the countries most vulnerable to dollar appreciation
"Looking at the size and composition of their balance of payments and the amount of financial buffers in the form of foreign exchange reserves, Moody's identified Argentina, Ghana (B3 stable), Mongolia (B3 stable), Pakistan (B3 negative), Sri Lanka (B1 negative) and Zambia, beside Turkey, as the emerging and frontier market sovereigns most vulnerable to dollar appreciation," it added, mentioning the countries' ratings.
"And out of these, Argentina and Pakistan's currencies have experienced particularly marked depreciations against the dollar year to date."
https://www.dawn.com/news/1428654/pakis ... ion-moodysIn June, Moody’s had downgraded Pakistan’s rating to negative from stable.
Re: Pakistani Economic Stress Watch
Capital controls that ripoff savers will be one of the measures enforced in Pakistan by the IMF as one of the lending terms.
The capital controls being a prelude to inflation of the currency's value.
Savers should get their money out of Pakistan asap before they get milked of their funds.
The basis of the banking "industry" is fraud.
----
Russell Napier: "The IMF Is About To Send A Profound Shudder Through A Generation Of Investors"
https://www.zerohedge.com/news/2018-09- ... -investors
The capital controls being a prelude to inflation of the currency's value.
Savers should get their money out of Pakistan asap before they get milked of their funds.
The basis of the banking "industry" is fraud.
----
Russell Napier: "The IMF Is About To Send A Profound Shudder Through A Generation Of Investors"
https://www.zerohedge.com/news/2018-09- ... -investors
Re: Pakistani Economic Stress Watch
The same economists have made it to India as well.Peregrine wrote:X Posted on the Terroristan Thread
All Hail the new Terroristanonomics!
‘Pakistan can address payment woes by curbing GDP growth’ - Shahram Haq
LAHORE: Pakistan can tackle its balance of payments woes by slowing down gross domestic product (GDP) growth through fiscal and monetary contraction as currently it is the only short-term solution for the country’s economic managers, suggested a research conducted by the Lahore School of Economics (LSE).
https://www.livemint.com/Money/lzKUNMmZ ... -curr.html
Simply put, if we have higher growth, we will have a higher current account deficit, which will weaken the currency further, stoke inflation and lead to higher bond yields.
A falling rupee may also deter portfolio inflows in both stocks and bonds.
As JP Morgan’s Jahangir Aziz said to CNBC- TV18 on Tuesday: “In a situation like this, there is no other option but to bring down the current account deficit by the old fashioned method, which is by reducing growth.”
Re: Pakistani Economic Stress Watch
Mid-West (the Barbarias/Dhobis etc) economy is primarily oil economy. When Oil is $30 per barrel or even less, there is even less of a profit margin available for the non-diversified Mid-West economies to invest back into their own economy leave alone support loans to a failing Baki economy.
For example, from a brookings report on Barbaria-Baki relationship in 2008:
Of course since energy is an input to any economy, with cheap energy Bakistan can start growing their economy. However economy growth also requires skills/talents and more important legal safeguards and free movement of goods and services. Particularly the later requires more open society which Bakistan is not. More importantly with an economy already in doldrums and the baki rupee losing its value fast, its imports of energy will be inherently costly relative to the economy. It might be a situation that even the cheap energy is costly for the baki economy.
Here is the effect of loans on Baki economy (not citing the baki newspaper URL)
Why $30 per barrel is the figure I am quoting? A barrel of oil is equal to some 42 gallons or @130 litres. Assuming no processing is required and bakis are able to consume all the crude directly (there is a cost to refining which I am totally going to ignore) at current market rates of @120 rupees to a USD, it will cost Bakistan some Rs. 15000. Baki economic output should be at least 5-7x (or Rs. 75000-Rs 100k) after consuming that barrel of oil to generate some positive economic output. Anything less will lead to stagnation. Even lesser will result in drop in energy consumption ergo Venezuela.
https://money.cnn.com/2017/07/26/news/e ... index.html
Bakistan is currently at that tipping point where it is just able to sustainably eke out a value after consuming a barrel of oil. And this is because of massive aid it is getting. Any disruption in the aid, we will see Bakistan heading towards Venezuela state
For example, from a brookings report on Barbaria-Baki relationship in 2008:
OrPakistan has received more aid from Saudi Arabia than any country outside the Arab world since the 1960s. For example, in May 1998 when Pakistan was deciding whether to respond to India’s test of five nuclear weapons, the Saudis promised 50,000 barrels per day of free oil to help the Pakistanis cope with the economic sanctions that might be triggered by a counter test. The Saudi oil commitment was a key to then Prime Minster Nawaz Sharif’s decision to proceed with testing. It cushioned the subsequent U.S. and EU sanctions on Pakistan considerably. Official aid is matched by large investments from Saudi princes and from religious institutions. Much of the Pakistani madrassa educational system, for instance, is Saudi funded by private donors.
That is if the oil prices dip down to say $30, leverage of Barbaria on Baki economy goes down. Barbaria cannot subsidize it further for Bakistan.The Saudis’ leverage to ensure a favorable outcome of the crisis is significant if limited. With oil prices hovering around $100 to a barrel, cheap subsidized Saudi oil is critical to the Pakistani economy and energy can be a major leverage point.
Of course since energy is an input to any economy, with cheap energy Bakistan can start growing their economy. However economy growth also requires skills/talents and more important legal safeguards and free movement of goods and services. Particularly the later requires more open society which Bakistan is not. More importantly with an economy already in doldrums and the baki rupee losing its value fast, its imports of energy will be inherently costly relative to the economy. It might be a situation that even the cheap energy is costly for the baki economy.
Here is the effect of loans on Baki economy (not citing the baki newspaper URL)
Changing gears, my theory:Days after the Islamic Development Bank (IDB) activated its three-year $4.5-billion oil financing facility for Pakistan, which will give stability to rupee-dollar exchange rate in the interbank market that has largely remained under pressure, Saudi Arabia has announced Rs1b financial assistance for the Islamic republic as the latter is facing a severe strain on the external financing front....
...The strengthen rupee would be a reason for a decrease in the prices of petroleum products, eatables, dairy products, mobile charges, transport and vehicles.
Many analysts however expect Pakistan to turn to the International Monetary Fund for a bailout, which is expected to be in excess of $10 billion, according to local media reports.
Finance ministry says Pakistan may receive $200 million in loan from Chinese commercial banks next week. Another commercial loan of $100 million is expected in the last week of August.
Why $30 per barrel is the figure I am quoting? A barrel of oil is equal to some 42 gallons or @130 litres. Assuming no processing is required and bakis are able to consume all the crude directly (there is a cost to refining which I am totally going to ignore) at current market rates of @120 rupees to a USD, it will cost Bakistan some Rs. 15000. Baki economic output should be at least 5-7x (or Rs. 75000-Rs 100k) after consuming that barrel of oil to generate some positive economic output. Anything less will lead to stagnation. Even lesser will result in drop in energy consumption ergo Venezuela.
https://money.cnn.com/2017/07/26/news/e ... index.html
Bakistan is currently at that tipping point where it is just able to sustainably eke out a value after consuming a barrel of oil. And this is because of massive aid it is getting. Any disruption in the aid, we will see Bakistan heading towards Venezuela state
Re: Pakistani Economic Stress Watch
I personally think that this is the right time to give a big fat blow to baki economy by pumping fake baki rupees in to bakistan. If bakis could do it to India, why should we keep quite. We should be able to reply back in kind with interest.
using bakis own calculations that i baki = 10 banias, we should flood it with 10 times more fake cash than they did to us. what say fellow rakshaks??
using bakis own calculations that i baki = 10 banias, we should flood it with 10 times more fake cash than they did to us. what say fellow rakshaks??
Re: Pakistani Economic Stress Watch
rajsunder wrote:I personally think that this is the right time to give a big fat blow to baki economy by pumping fake baki rupees in to bakistan. If bakis could do it to India, why should we keep quite. We should be able to reply back in kind with interest.
using bakis own calculations that i baki = 10 banias, we should flood it with 10 times more fake cash than they did to us. what say fellow rakshaks??
Is it really worth our time and effort to be printing that trash? We can't possibly do a better job of screwing them over than they are doing already.
Maybe subcontract this fake money business to the Afghans, who can use their porous border and trading links to benefit from it.
Re: Pakistani Economic Stress Watch
uhh we don't need to do anything. Pakis will themselves be printing more to cover their Budget deficit. The whole 1T PKR.rajsunder wrote:I personally think that this is the right time to give a big fat blow to baki economy by pumping fake baki rupees in to bakistan. If bakis could do it to India, why should we keep quite. We should be able to reply back in kind with interest.
using bakis own calculations that i baki = 10 banias, we should flood it with 10 times more fake cash than they did to us. what say fellow rakshaks??
Re: Pakistani Economic Stress Watch
IMF to visit Pakistan with $7.5bn package
Bummer if true... should put a brake on unsustainable economic growth, like any good IMF program. Piti that Imi's dreams of Naya Pakistan is already going up in flames, and Honeymoon period not over yet.“The extended program will accompany stiff conditions of introducing institutional reforms and taking some unpopular decisions on the part of the government. The conditions may include a range of reforms such as the central bank’s independence, exchange rate flexibility, and an aggressive push to privatise public sector enterprises (PSEs) etc. apart from the increase in utility charges” said the sources.
Re: Pakistani Economic Stress Watch
Apart from USA numerous Nations and multilateral agencies providing aid to Pakistan.
Anyone has any paper or details or link to website that will give us an estimate about the AID received by Pakistan from other Nations and multilateral agencies apart from USA?
Pakistan also receive numerous duty concessions and preferential access to markets from USA, Europe, Middle East etc. Anyone has details thereof?
Anyone has any paper or details or link to website that will give us an estimate about the AID received by Pakistan from other Nations and multilateral agencies apart from USA?
Pakistan also receive numerous duty concessions and preferential access to markets from USA, Europe, Middle East etc. Anyone has details thereof?
Re: Pakistani Economic Stress Watch
It might be a good thing also. instead of Paki govt taking measures for long term, IMF will dictate short term measures. it is a known strategy to prop it up a little bit to let it sink more and not let them get wiser.dhyana wrote:IMF to visit Pakistan with $7.5bn package
Bummer if true... should put a brake on unsustainable economic growth, like any good IMF program. Piti that Imi's dreams of Naya Pakistan is already going up in flames, and Honeymoon period not over yet.“The extended program will accompany stiff conditions of introducing institutional reforms and taking some unpopular decisions on the part of the government. The conditions may include a range of reforms such as the central bank’s independence, exchange rate flexibility, and an aggressive push to privatise public sector enterprises (PSEs) etc. apart from the increase in utility charges” said the sources.
Until Pak economy reaches that certain point of bankruptcy, keeping it propped up on crutches is the course of action. Once the tipping point is reached, then all these institutions will come for their pound of flesh.
Re: Pakistani Economic Stress Watch
Paks getting IMF bailout is not good. They will put conditions to recover the economy, which is not ideal for us.
Ideal is Chinese themselves giving 7.5 b without condition and higher interest. Wonder why Pakis did not go for such a deal.
Planning to show tenga to the IMF? Chinese will squeeze every penny back.
Ideal is Chinese themselves giving 7.5 b without condition and higher interest. Wonder why Pakis did not go for such a deal.
Planning to show tenga to the IMF? Chinese will squeeze every penny back.
Re: Pakistani Economic Stress Watch
The one thing I want IMF to do is force Pakistan to reveal exact terms of loabs from China. When the ordinary Pakistani, who cannot stop singing praises of the benevolant Cheenis realizes how badly they have been shafted, that will be a bigger body blow to the deeper than ocean friendship than anything we could ever do.
Re: Pakistani Economic Stress Watch
We want the Paks fully in Chini camp. Right now it is useful to both US & Chini. Once they are fully in Chini camp, they will find it difficult to make deals with US.
It is the US backing which allows PA to carry out all the shenanigans. US should be made to publicly declare Pak as an enemy.
It is the US backing which allows PA to carry out all the shenanigans. US should be made to publicly declare Pak as an enemy.
Re: Pakistani Economic Stress Watch
This is a long game. Economy of Pak is still not as bad as Greece was once, ideally you'd want it to be Venezuela or NoKo bad.
They can still print money for their internal circular debt, might give rise to inflation but it wouldn't be as bad as you'd expect.
Now the money IMF will provide is just to give the interest of loans, not the actual principal amount. even if Pak gets 7 billion, they will be short of 4-5 billions which they have to take fromsomewhereChina.
If IMF pull its hands right now, it might be 50 less nukes till 2030, but there still will be 100 or so nukes pointed at us. plus the indigenous movements are not Syrian Kurd strong yet to take advantage of the uncertainty of the initial years of cash crunch.
It will be in our own interest to let them float above a bit just to sink more.
plus: No country has ever turned its economy by bailout packages from IMF. Pak has already taken the package more than 20 times, result is in front of us.
They can still print money for their internal circular debt, might give rise to inflation but it wouldn't be as bad as you'd expect.
Now the money IMF will provide is just to give the interest of loans, not the actual principal amount. even if Pak gets 7 billion, they will be short of 4-5 billions which they have to take from
If IMF pull its hands right now, it might be 50 less nukes till 2030, but there still will be 100 or so nukes pointed at us. plus the indigenous movements are not Syrian Kurd strong yet to take advantage of the uncertainty of the initial years of cash crunch.
It will be in our own interest to let them float above a bit just to sink more.
plus: No country has ever turned its economy by bailout packages from IMF. Pak has already taken the package more than 20 times, result is in front of us.
Re: Pakistani Economic Stress Watch
China has already factored in Pakistan's "debt forgiveness" ahead of time by jacking up the price of OBOR infrastructure 3 fold when presenting Pakistan the bill.
Watch soon how China "forgives" some of Pakistan's OBOR debt - which was a result of massive over-billing to begin with.
Whatever amount is forgiven however will be extracted in maintenance costs spanning decades.
This since all suppliers for OBOR related infrastructure are in China and the host country cannot fully upkeep OBOR infrastructure without China.
Only Chinese construction & supply firms have benefited from OBOR.
None of the routes are profitable now nor will ever be in the foreseeable future.
China already knew this prior to hyping OBOR as easy money to the host country to induce them into heavy debt.
That and the (fake) promise of moving tons of manufacturing jobs from China to the host country if they built OBOR infrastructure - which is turning out to be a total lie.
You can identify the dumb nations of the world by how quickly they fell for that line.
Watch soon how China "forgives" some of Pakistan's OBOR debt - which was a result of massive over-billing to begin with.
Whatever amount is forgiven however will be extracted in maintenance costs spanning decades.
This since all suppliers for OBOR related infrastructure are in China and the host country cannot fully upkeep OBOR infrastructure without China.
Only Chinese construction & supply firms have benefited from OBOR.
None of the routes are profitable now nor will ever be in the foreseeable future.
China already knew this prior to hyping OBOR as easy money to the host country to induce them into heavy debt.
That and the (fake) promise of moving tons of manufacturing jobs from China to the host country if they built OBOR infrastructure - which is turning out to be a total lie.
You can identify the dumb nations of the world by how quickly they fell for that line.