Media has taken the CAG reports little too seriously

This is the statement by our Prime Minister Dr. Manmohan Singh. The CAG report has been used by the media as the Fodder to chewn on and none of the politicians could question the integrity of the source. That has been the issue for the Congress.

Another important point that has been mooted by the media. It was only the media that was interested in exposing the Scam and BJP was very relucntant in pursuing it vigourously in the early stages.

A Raja Resigns : Trial by Media

A. Raja had at last resigned from his post of Union Telecom Minister after severe pressure. A. Raja had been very arrogant dodging the media after the scam had broken about. It appeared that Raja thought that the media (and general public) are simply dogs barking at the sun. After all, he had seen many many politicians get away with the graft cases all the time. But the politicians had blinked this time. What changed?

The Media has made severe damage to the ultimate power seat (the Gandhis) for their silence. The Gandhis blinked once before also - in the Niyamgiri case. The Media industry will be seen in a different light from now on.

Will the Fourth Estate fight and win against the crony capitalism?

Indian Dreams and Chinese Reality

The Grandeur of CWG Opening made Indians thought that we are able to execite wpr;d class events. When Indian athletes won medals in CWG 2010, people thought that India has arrived as a Sports Giant. It includes me also.

But the bitter truth has hit us on the first day of the Asian Games 2010. The Grandeur of the Opening Ceremony painfully reminded us how mediocre was our ceremnony when compared to world standards.

The Reality of Indian Dreams rests in the Medal Count in China..

India's Greatest Threat - Populism vs Good Governance

I read an interesting and thought provoking article about Populism in TOI today. All the political parties in India have been engaging in the policy of giving freebies for votes under the guise of being Pro-Poor. This has grown to the extent that one has to wonder whether India has three different systems - Capitalism (for rich), Socialism (for middle class) and Communism (for the poor) all simultaneously existing together. How long will the party go on like this?

Not for indefinite period for sure.Mainly due to these policies, Many of the states of India are heavily in debt to the tune of laks of crores, not unlike the United States. As the US has come to realize, the laws of economics will one day catch up with these governments.

Solution to Currency War : Back to Gold Standard

World Bank President Robert Zoellick's Solution for Currency Wars seems to be back to Gold Standard.

Leading economies should consider adopting a modified global gold standard to guide currency rates, World Bank president Robert Zoellick said on Monday in a surprise proposal before a potentially acrimonious G20 summit. Writing in the Financial Times, Zoellick called for a "Bretton Woods II" system of floating currencies as a successor to the Bretton Woods fixed-exchange rate regime that broke down in the early 1970s.

The former US trade representative, who served in several Republican administrations, said such a move "is likely to need to involve the dollar, the euro, the yen, the pound and (a yuan) that moves towards internationalisation and then an open capital account. "The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values," he added.

Those who are familiar with the Gold Standard are very much against it and say that this economically stagnating and suffocating system does not allow more wealth (progress) into the system as more money cannot come into the system. Critics also point to the growth of Gold Cartels who can easily manipulate the whole economic system and that Gold Standard was responsible for the first two world wars.

Are we jumping from frying pan to the fire?

The India growth story has been repeated by everyone. There are arguments as to whether India's GDP would grow at 8.5% or 9% or higher. Numbers are playing a key game. Therefore, it is interesting to note that the numbers for the standard of living in the country give a different picture altogether. While GDP has been growing, but then so has the population of the country. As a result, India's GDP per person, which is an indicator for the standard of living, actually ranks at amongst the lowest in the world.

Source : EquityMaster

Quantitative Easing, Currency Wars and its Global Impact

The US is initating a Global Currency War with its Quantitative Easing. The inflation that is supposed to happen in US due to Quantitative Easing is not happenning there but it is happening everywhere else. The FDI dollars are inflating the Stock and Commodity Prices stroking the inflation in India. Subba Rao, RBI Governer, says there is a hidden cost in maintaining the Dollar Rupee Exchange Rate.. Are Countries like India indirectly paying for the US excesses by trying to maintain the currency rates..


India and QE

India, like many other emerging economies, is finding it tough to cope with huge capital inflows as investors from the West seek higher returns in these markets, given their robust growth.

“The biggest problem thrown up by capital flows is currency appreciation, which erodes export competitiveness. Intervention in the forex market to prevent appreciation entails costs. If the resultant liquidity is left unsterilised , it fuels inflationary pressures. If the resultant liquidity is sterilised, it puts upward pressure on interest rates which, apart from hurting competitiveness, also encourages further flows,” Mr Rao said in his speech.

The Indian rupee has appreciated by nearly 6% since early September on the back of inflows of over $11 billion through the portfolio route alone. Central banks often manage huge capital inflows by buying dollars and infusing the local currency in order to protect their respective currency from steep appreciation. However, if inflows are too high, the central bank has to mop up the excess local currency by selling bonds or sterlising inflows. This puts upward pressure on interest rates. If inflows are not sterilised, there could be inflationary pressures . A few countries such as Thailand and Brazil have imposed controls on capital flows, but this has only stoked fears about more funds being diverted to Indian markets.

Subbarao said RBI has to manage the impossible trinity, which alludes to the fact that a central bank cannot manage its exchange rate, an open or liberal capital account and an independent monetary policy simultaneously.

An IMF analysis indicates that emerging Asian economies have done relatively well in sterilising the impact of reserves growth on their domestic financial systems, a Fitch Ratings report said. The report warns that there could be an adverse implication of the second round of quantitative easing, or QE2, on China and India.


China and Quantitative Easing

Dollar issuance by the United States is "out of control," leading to an inflation assault on China, the Chinese commerce minister said in comments reported on Tuesday.

Chen Deming, speaking at a trade fair in southern China, said that exporters had done a good job of preparing themselves for exchange rate changes as well as rising labor costs, but were suddenly confronted with new challenges.

"Because the United States' issuance of dollars is out of control and international commodity prices are continuing to rise, China is being attacked by imported inflation. The uncertainties of this are causing firms big problems," Chen was quoted as saying by the official Xinhua news agency.

Chinese officials have criticized U.S. monetary policy as being too loose before, but rarely in such explicit language.