India's Economic Scenario

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Venkat123

Member
#51
#51
On US retail spending increase, if you throw out oil price increase and autos, the MOM change is flat. Last week, Walmart came out and said that people are buying food using gift cards. Retail stores are resorting to heavy discounting in order to attract customers. Profit margins by retailers as indicated by earnings report is quite bleak. Next couple of weeks we will know real spending when inflation numbers come out.

The market was being pushed yesterday. Germany's GDP slowdown was completely ignored while Japan's dismal 0.9% qtr over qtr increase caused a major upswing. And there was no mention of Singapore guiding their GDP lower.

In the US, whoever bought on the news yesterday got squashed today. The last long weekend in the US did not go well with global investors. This weekend is another long weekend in the US.

Here is a fact on stimulus packages in the US. No stimulus package has ever averted a recession. It's a political toy to show the masses something is being done. Rebate checkes will not be mailed out until the end of May.

4 week average for initial claims increased 10K+ to 348K. Anything above 345K indicates a very high possibility of a recession.

Municipals are finding it difficult to borrow because no one trusts bond insurers. No one wants to buy college loans. No one wants to buy auto loans. The banks have stopped intervening because they have their own problems. The port authority ( a well known entity in the NorthEast) had to pay 20% for it's debt up from 4.x% last week.
Anything risky is being dumped. In my opinion, bad news from any one emerging market will force investors to flee emerging markets as well. Nobody wants risk. Fed rate cuts are not working.
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aLgdqC2Kn7XU

A tsunami is approaching. You can either go pick up the fish on the shore or run to the mountains.
 
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deepsa52

Member
#53
#53
Venkat123 said:
A tsunami is approaching. You can either go pick up the fish on the shore or run to the mountains.
Click to expand...
I agree with that, the only reason US has not collapsed is because of the dramatic weakening of the dollar. ( Look at EUR, AUD, CAD vs USD) The Indian Rupee is also kept artificially low to stimulate exports and this is going to cause a run up in inflation. We all know that the published inflation figures are usually understated. This is likely much worse than the dot com bust.
Watch this terrifying video of Northern Rock ( one of the large British banks bankrupt and bailed out by British Govt , but US Govt does not have the luxury of bailing out!!), it shows the sign of things to come that are several times in magnitude.
http://www.youtube.com/watch?v=I20lMyYW83E

As I mentioned earlier, I think this is a secular commodities bull market , may be someone did not like that thread, that thread was deleted.( as always place your bets with "stop losses" ).
 
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deepsa52

Member
#54
#54
These type of articles have started appearing in main stream media. Some prominent economists have also started using the dreaded depression word .

http://edition.cnn.com/2008/US/02/28/beck.commentary/index.html
http://www.forbes.com/home/forbes/2008/0225/036a.html

Not a good sign....and I know in US a minority of the financially savvy people have started storing emergency food supplies and precious metals , hope it does not get there. There is a good chance that global economies will be in recession, if not already in a recession, however India is large and relatively safer compared to smaller countries.
 
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gambhirvijay

New Member
#55
#55
How can we wither this economic crisis

In this economic doom and gloom we can keep on waiting for the tide to come and sway us to the happy times OR we can work to change its direction. There is so much negativity in the marketplace; trust in international transactions is at their lowest ebb. Financial Institutions are falling, big companies are going through the crisis, people are losing jobs, Share Markets are down and everyone is finding solace by blaming USA / developed Nations / Sub Prime Mortgages/ ineffective regulations/ collective greed etc.

As they say, there is always an opportunity in crisis, we can make the difference and there is a dire need to do something and get over the present uncertainty.

We all know that there is a need for big infrastructure spending by Governments to provide stimulus to the economy. Governments are looking in their treasury and coming up with the schemes. India was hoping for private equity to prop up investment in Infrastructure but current scenario has made this very difficult. We are looking for directions from our leaders and they are seemingly doing their bit.

We take pride in being a part of a Nation which has done well in past few years. Most of us are adept to come out of difficult circumstances and leave our mark. We all do work for long hours and take holidays rarely. Indians overseas have done very well and are appreciated for their hard work and ethics. True, there are still numerous problems, economic disparity, no social security, corruption, bad state of public sector, terrorism are just few of them.

Lack of law enforcement agencies, corrupt politicians/ bureaucrats tend to make things difficult. The need of the hour is better and effective leadership. For a change, why cant Indian Public / media try to put some ideas together and insist Government to implement few of those?

Well, I was just wondering that every one of us knows that there is so much black money in India. Unfortunately, most of the politicians, rich and middle class people have accumulated money for which tax has been evaded or which is unaccounted for. There had been few instances in the past of bringing that money into the mainstream and those were moderately successful.

I was just thinking, why cant Indian Government start The India Development Fund , put some money / resources into that fund and then market that as a fund which will be overseen by panel of some of the most distinguished Indian personalities (like Mr. Kalam, Mr. Narayan Murthy etc). Once transparency and accountability in set up/ functioning of that fund and expenditure from that fund is ensured insist Indian population, including politicians, industrialist & bureaucrats, everyone to put some of their black money into it to turn the other part of that money into white. A receipt of the money they deposit shall be given and people will not be asked for the source of x times the money they deposited into that account. Meanwhile along with this package, Income Tax / Sales Tax/ Government earnings enforcement departments enhance their vigil to unprecedented level. Soon, there will be enough money which can be used to fund for the building of roads, schools, hospitals, public transport etc. Enough jobs to keep people employed.

Well, how simple this sounds but I am aware that this is not going to happen as we live in a place where our roots have gone corrupt, people need to pay money to get the rightful thing done, Leaders who should be laying out the policies for better future and regulating agencies for better governance are busy accumulating money. All political parties look for myopic gains and can go to any extent for getting into power. They hinge to their market segment & try to gain maximum out of that. Votes on the name of Religion, cast and social strata is more important than fighting for the real issues like Poverty, Economic disparity, illiteracy.

Well, Woh din kabhi to aayega___ when things will change. By that time we can keep the candle of hope alight.

Sounding like a cynical, well I am; but for the love of me I want to see India at the top of everything. Alas, we are not learning from our mistakes and are not pushing our Government to act in a fair and effective way. Cant we change and be a bit more demanding from the Government, Cant we do our bit and try to follow the honest approach and dont pay to come out of the queue, paying for something which should be done as per the norms by a public servant is a crime and still we commit that. We assume that things dont move otherwise. Well, we have selected, where we are today and we will choose where we will be in future, I just pray that our collective strength help us select the right leaders.
 
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learn2trade08

Guest
#56
#56
here is an interesting write-up i was going through...

............................................................................
A Depression is Not Just a Bad Recession
A Recession is when your friend loses his job
A Depression is when you lose your job
A Great Depression is when an economist loses his job

They are different in kind not just size. The rule of thumb that a Depression is a Recession of 10% or greater drop in GDP is more misleading than helpful. A Recession is typically caused when the central bank RAISES rates to cool off an economy. A Depression is caused by a banking crisis that comes from the central banking LOWERING rates, spurring a credit bubble which leads to the banking crisis.

Given the very different causes, the solutions are also different. This lack of understanding is causing us (as we did in 1931) to prolong and deepen the downturn by excessive intervention that is poorly designed. For example, Bernanke has recently criticized Andrew Mellon, the much maligned Treasury Secretary in 1929 who urged the government to sit back and "purge the rottenness from our system." Yet Hoover ignored his advice and actively intervened with public works, tariffs, taxes, bank bailouts and more.

Recessions tend to be short (less than a year) and modest (less than 5% drop in GDP). A recent study The After Math of Financial Crises looks at all the post-war (WWII) banking crises and concludes that Depressions are much deeper and longer than Recessions:

five years for unemployment to bottom (worse by 7%)
six years for housing to begin to recover (down 35%)
three and a half years for stocks to bottom (down 60%)
two years of severe GDP decline (down 9%)
Typically government debt increases by 86%, largely from a dropoff in tax revenues. Bailouts of banks tend to relatively small compared to other causes of a massive increase in government debt, including big increases in spending to attempt to fight the downturn.

The authors, both professors (Harvard and UMd) and members of the NBER which officially calls recessions, note that so far this crisis has seen asset prices decline as expected from prior bankng crises. They urge caution: "one would be wise not to push too far the conceit that we are smarter than our predecessors." Unlike the other post-war banking crises, "with the notable exception of the Great Depression", this one is not isolated to a country or region like Sweden or Japan, but is global. "The global nature of the crisis will make it far more difficult for many countries to grow their way out through exports, or to smooth the consumption effects through foreign borrowing."
 
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jnj333

Active Member
#59
#59
India's swim against the tide -

GDP to grow at 7.1% in 08-09, if this figure is coming at around mid Feb then we can be assume it quite correct. For me anything above 6% is excellent in the current enviorment, and that makes India the second fastest growing economy in the world after China. The time is quite ripe for long term investors to start making a re-entry.
 
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