Soros says worst of global crisis behind us

The following are comments of Soros about the current situation of globalization/global crisis :

This is not like previous crises but marks the end of an era. The system to date had been based on the false assumption that markets can independently regain their equilibrium and that the system is self-correcting.

We need international regulations to retain international markets. This won't be easy...If we won't be able to do this... than globalization, as we now know it, will fall apart,

To deal with the current crisis,  the state must step in, give guarantees to financial institutions and increase government spending.

Since that could create a risk of hyperinflation he said the state must diminish its role once the credit system is restored.

signs of reverse migration = reversal of globalization

Signs of reverse migration from urban to rural areas have started to appear. This is a significant reversal for Globalization.

The UN warns that poor people living in cities will probably face the most severe problems in coping with the global recession, because lower export demand and reduced foreign investment are likely to hit urban jobs harder.Many migrants to urban areas would be likely to return to rural areas, it added, transferring the burden.

Incomes have also dropped "substantially" in some developing countries where families depend on remittances from relatives working abroad.With the financial crisis hitting all parts of the world more or less simultaneously, developing countries have less room to adjust, the UN agency says.

Bric Summit and the dollar

The BRIC term was coined by Goldman Sachs economist Jim O'Neill in 2001 to describe the growing power of emerging market economies - Brazil, Russia, India and China.

The BRIC nations account for 15 percent of the $60.7 trillion global economy but Goldman Sachs predicts that in 20 years time, the four countries could together dwarf the G7 and China's economy will overtake the United States in total size.

These countries had met formally in the first BRIC summit as  an attempt to give the grouping a bigger voice in the world.  The Russian President Medvedev announced that "The BRIC summit must create the conditions for a fairer world order".  Comments by Russian President Dmitry Medvedev on Tuesday suggesting a need for a global reserve currency other than the greenback highlighted the challenges facing the dollar -- and sent it sliding across the board. Just a few months ago, China had suggested how the dollar could be replaced as the world's main reserve currency. Nouriel Roubin  said the main fear haunting investors is that the United States could allow inflation to return or the dollar to devalue as a way out of its debt problems.

However the summit had ended meekly without any major announcements on the strategy regarding dollar. The lack of mention of the dollar in the final statement appeared to underline again the differing positions among the BRIC nations about how to reform the world currency system. Russia has tended to be much more outspoken against U.S. dominance of the financial system than other BRIC nations, which favor a more cautious and diplomatic approach.

Dollar seems to be going to have a longer run as the world's reserve currency.

Global economies Shrunk by huge margins

Many Countries are reporting that their economies have shrunk considerably, during the past 4 months. 

Singapore's economy has shrunk by 14.6%. 

Mexico's economy has shrunk by 8.2%

Eurozone countries economy has shrunk by 2.5%

Japan's economy has shrunk by 4%

Spains's economy has shrunk by 2.9%

While US has tightened the credit card loans today, consumer spending is all set to go down from what is today. Also, there is going to be another round of big layoffs in US due to GM and Chrysler Bankruptcies. This should be triggering another round of contraction in the global economy.  

Tough times for Globalization ahead.

India decides - Electon'09 Mandate

India has elected Dr. Manmohan Singh again as the PM. He is the first PM to return to office after a very long time.  The popular rural schemes that provide employment and loan waivers have brought in the critical votes need to enable congress win substantial seats. The urban people also believe that Congress is a better alternative to the BJP. The anti-congress vote had split into 3rd front, 4th front and 5th front (smaller parties like Vijaykanth's DMDK in Tamil Nadu, Chiranjeevi's party in AP etc.), giving a good lead for the Congress.

The mandate for the PM and the popular schemes has been translated  as a mandate for Rahul Gandhi himself as future PM. The people are being tuned to accept Rahul as the next PM whenever Manmohan Singh retires.  

Nano Housing for India

As the real estate prices have zoomed past the affordability of majority of Indian Middleclass, builders are adopting innovative strategies like reducing the height of the roofings, building single room studio apartments etc. 

Tata Group is now taking the lead in this sector also. It is launching a Nano housing project that will include properties in sizes like small one room kitchen, large one room kitchen and 1BHK. With a balanced mix of buildings and open spaces, these projects will be constructed under the guidance of Indian Green Building Council (IGBC).  Moreover, the value homes will be priced between Rs 3.9 lakh and Rs 6.7 lakh

The first township of this nationwide project will be developed inBoisar, with plans to expand into other Tier I and II markets in the country. With a Balanced mix of buildings and open spaces, these projects will be constructed under the guidance of Indian Green Building Council (IGBC).  The project will be known as "Shubh Griha Township" and will be built in Boisar, Mumbai.

I feel that having a Nano house in the bachelor stages of life, which for most people now extends to a decade, is better than having to live in a rented house (and spending one-third of one's salary).  But on the flipside, it would bring down the living standards of people where having  a two bedroom flat might mean you're a middleclass millionaire.

India in a Ring of Fire

While India has taken advantage of the globalization, its periphery - neighbouring countries have failed to do so. India's neighbours including Pakistan, Nepal, Srilanka and Myanmar are close to being "Failed States".  India now has to make strategic moves to pull its neighbours as China is already knocking on its doors. 

Home Minister Palaniappan Chidambaram says India is caught in a “ring of fire”. with War and misery blights Sri Lanka, with political ramifications in India; Bangladeshi politics remains volatile and the country eyes India with suspicion; the military junta in Myanmar is pro-China; Pakistan is wobbling under a spell of violence that has a direct bearing on India’s security.

The Economist magazine says a potential challenge to India’s rise is geopolitical (and the Nepal crisis bears that out). It says how successful a global power India becomes will depend partly on its ability to mediate and resolve the rising number of crises in its neighbourhood. 

The South Asian Association for Regional Cooperation (SAARC) is an economic and political organization of eight countries in Southern Asia. In terms of population, its sphere of influence is the largest of any regional organization: almost 1.5 billion people, the combined population of its member states. It was established on December 8, 1985 by India, Pakistan, Bangladesh, Sri Lanka, Nepal, Maldives and Bhutan. In April 2007, at the Association's 14th summit, Afghanistan became its eighth member.

India needs to leverage on the SAARC organization and bring about a geopolitical reorganization in the region if it has to compete meaningfully with China.

Links: 

1. India's Future

2. India in a ring of fire