Good Bye 2022. What to look forward in 2023.

Posted on January 1, 2023 by Sandeep Bhalla

Happy New Year 2023

The year 2022 has ended and it is a matter of relief. For past many years end of year comes with the relief that it is over but unfortunately that is not happening. The recent developments in China shows that the pandemic may not be over as yet even though in India, it is almost normal now. Let’s look back at the year 2022.

Finance:

During the year, the Reserve Bank of India has added 65.11 tonnes of gold to its pile. This is the highest purchase in a single fiscal year, second only to the 200 tonnes of gold bought in FY10 from the International Monetary Fund (IMF). It is seen as an attempt to diversify away from US dollar. RBI has launched Digital Rupee and as also started International trade in Rupee, starting with Russia and Sri Lanka.

While inflation in India is at modest 6%, the entire world has experienced inflation in double digit something the western economies have not seen for several decades. Rapid increase in repo rate by Central Banks did not prove very effective in controlling inflation but it may cause recession. We have to wait to see if it happens and its domino effect on the world. If Pandemic was the cause for the economic turmoil, Ukraine war acted as a booster to the problems.

Ukraine War:

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Why there is slow down in India’s economic growth?

Posted on November 30, 2019 by Sandeep Bhalla

Growth slumps to 4.5%:

At 4.5% growth rate in last quarter was slowest in last 6 years. The bigger question is whether it is the bottom or will it fall further. Debates are going on Television but the two debates I listened missed a few points. All the talk about fiscal stimulus and monetary policy is fine but human behaviour is even more important. The fundamental aspect is that the structure of economy of India is fundamentally different. 80% of economy is enterpreneurship and almost informal. The companies listed in share market, limited companies, registered LLP etc are just balance 20%. No country has this structure. Now that fact is established, let me list my three points:Flood:The last quarter saw flooding in low lying areas of nearly all big states. It was the worst flood in 25 years. Flood do affect economy. It lowers consumption. It slows down manufacturing. Mining activities are worst affected by floods and accordingly mining saw negative growth.

What drove growth:

Continue reading →

Lesson from 2008 economic debacle: Live without debts!

Posted on March 1, 2013 by Sandeep Bhalla

Buying freedom without spending:

Year 2008 was a disaster for Middle Income group and for investors. People lost Money, homes, jobs and their way of living. The people who had gained from investments in few preceding years saw the tsunami of debacle wiping out gins within a span of few months. However seeing the things so closely, it did make me think as to what lessons can be learned from the entire episode of collapse. I realised that the only lesson which can be learned, is to live without debts. That must sound incredulous to most. Actually there are billions of people who still do not borrow besides the other millions who are in debt right upto their nose. Continue reading →

Bernanke: Lack of ‘oversight’

Posted on April 14, 2012 by Sandeep Bhalla

Ben Bernanke dollar (Photo credit: Gage Skidmore)

Following is the extract from the Speech of Mr. Ben Bernanke:

He characterized subprime mortgages as a “trigger” of the crisis, but “vulnerabilities” — like a lack of oversight and regulations — were also largely to blame for amplifying the financial shocks, he said.As a result of the crisis, the Federal Reserve has since taken steps to strengthen its supervision of banks. Bernanke pointed to the Fed’s stress tests of the largest U.S. banks as an example of one improvement, but otherwise didn’t get into many specifics.”We want financial firms to be able to not only assess the current value of their portfolio, but we also want to understand where they would be under severe scenarios,” he said. (via Bernanke: Lack of oversight worsened crisis – Apr. 13, 2012.)

The words marked in italics forced me to check my English vocabulary and then grammar. Wiktionay defines oversight as “An omission; something that is left out, missed or forgotten. ” So the lack of oversight would mean that Fed should have overlooked something but it did not. Next word is Regulations. The complete phrase would be ‘lack of Regulations’. Now there can not be Regulations if you actually intend to overlook something. I have checked other websites. All carry the similar phrase.Here is the search result. Would somebody please stand up and tell me what he actually meant?

Welcome to the clearly ambiguous 21st Century!

Bernanke: Lack of 'oversight'