Feds and its Fibs II

This blog is a continuation from Feds and its Fibs I.

Inflation is weakening of the value or ability of money to purchase goods & services. If I used to buy a kilo of apples for Rs. 100 some years back but I can buy only 750 gms today for the same Rs. 100, that implies there has been inflation. So, if there is severe inflation in the US as I have referenced in the previous part, it is but natural to wonder why has the US$ appreciated against most world currencies unlike what happened with Argentina or Venezuela or Zimbabwe or Sri Lanka when these countries started facing high inflation vs their respective historic averages. For instance, vs. the INR, US$ rate has moved from 72.99 to 79.71 in the past one year (it had briefly crossed the 80-mark as well) and vs. the EUR, it has moved from 0.84 to a parity of 1. (I have deliberately ignored CNY because of the managed floating system China follows where the CNY is pegged to the US$ based on the People's Bank of China's reference rate). This economic principle defying behaviour is the greatest shield the US$ and the USA has had over past so many decades.

Feds and its Fibs I

The US Federal Reserve (The Fed) conducts its annual economic symposium in the Jackson Hole mountain valley and the event is keenly watched by economists and financial experts around the globe for it has now come to witness presentation on major US monetary policy decisions and commentary on the road ahead for the world's largest economy. The event's highlight is the Fed Chair's speech and this year's roughly 8 minute readout by Fed Chair Jerome Powell was truly representative of the classic deer in the headlights moment. The Fed's commentary continues to confirm critical implications for the global economy in the wake of the COVID pandemic and hit by high inflation. Empty vessels clang the most, it is said. The fact that that the Fed has been talking a lot and acting little personifies the idiom. To delve into this, I shall be publishing a two-part blog. In the first, I intend to explore the genesis of the US' inflation problem and present circumstantial & tangible evidence on the Fed's cognitive dissonance while creating this problem. In the second, I wish to put forth the argument on why is it now going to be quite different than what it used to be in the past and what may Bhaarat look forward & adapt to.

Budget Betrayal

It is that time of the year when the talk on tax slabs heats up and #Budget2022 was no different in evoking another set of strong yearly reactions with the Finance Minister not even tinkering the slabs & slab rates to the benefit of the salaried and middle class. The economy & citizenry was hit by the pandemic, especially so by the second wave which recorded a significant loss of lives & livelihood. If ever there was a time of extending relief and mitigating the slipping back of families into 'poverty', this was it. Yet, the GoI severely disappointed the middle class and hence the natural outpouring of justified emotions. There was a time when taxing was considered a sanctioned loot by the government; from there, we have reached a point where I see so many positive voices expressing that taxes are being put to good use and hence the resistance of these individuals to governments collecting personal income tax has reduced significantly. From a blanket pessimistic view, this year's budget has witnessed a progressive and constructive expression of angst that the middle class income taxes are the major financiers of the welfare & freebies. In today's blog, I seek to explore this statement.

Virus, Vista and Vedas

The receding second wave of the #ChineseCommunistVirus in May 2021 has witnessed a much higher death toll than the first wave and that has naturally led to further fraying of emotions. I saw multiple arguments afloat during this time, that focused on targeting any activity/expenditure from the government or even private institutions that was not directly connected to fighting the pandemic. The notable targets were the Central Vista and the ongoing construction of the Raam Mandir. In today's blog, I intend to present certain perspectives at play divided into three sections - one, base facts on the health sector & more; two, a micro-level inspection of the fabled Temple vs Hospital or Religion vs Science or Economic Projects vs Human health arguments and three, a macro level presentation on Bhaarat's Temple Ecosystem. I am hoping that the write-up will nudge the reader to give a nice thought - take what appeals to him/her and leave everything else behind.

In Queue, In Quandary

A few days back, I had posted a small Facebook write-up - a set of three Q&A on vaccine pricing with a hope that it would answer queries of those genuinely interested in seeking answers while demonstrating either the ignorance or the malice of the other kind, aka Left Liberal educated intellectuals. Today, I am going to present a write-up offering perspectives on the process which preceded vaccine pricing, i.e. its supply chain. This blog is an outcome of my wife's insistence for presentation on this topic as she is totally peeved with unreasonable charges being thrown across the table ignoring the supply chain management concepts of queuing, run-rates, inventory, cash conversion cycle and capex (or capital investment). Letting her stay peeved is not in my best interests - physically as well as emotionally, hence - In Queue, In Quandary. Using basic daily life examples and avoiding complication of the financial terms mentioned in the previous sentence, I'll present a simple food-for-thought perspective on this topic. By the end of the write-up, I am hoping I would have unboxed few of the answers to some of the questions swirling around, such as the following:

1. Why the Centre doesn't procure vaccines for all its people unlike some western nations?

2. Is there a vaccine shortage and production deficiency? If so, why not ramp-up?

3. Why have we not halted vaccine exports and rather, why are we not importing additional vaccines?

Costs of a Crisis

In Sep 2020, I had written a blog titled Greenwoods for the GDP on the backdrop of massive liberal & opposition outcry as the FQ12021 GDP fell by 23.9% y/y. In the blog, I had presented the economic background on why the fall was inevitable, how it stands in context of our country's fight with the #ChineseCommunistVirus as well as certain socio-economic comparisons with the developed world. I had also mentioned how our leadership chose to take the middle road by attempting a balance between lives & livelihood, the two twins in any crisis. Eventually, I had remarked that how the Left Liberal Ecosystem would have gone to town over fatalities if not the GDP fall had India chosen to be as brazen as say the USA when it comes to restrictions and safety protocols. Seven odd months down the line, the ecosystem has found that long lost twin called lives ironically in the Kumbh Mela in Haridwar. Given that the fabled ecosystem has found this twin after pompously expressing mock concern over the other twin called livelihood back in Sep 2020, I thought about taking up this opportunity to present the twin sides associated with any crisis taking the example of Kumbh Mela in Haridwar.

Private, Reporting for Duty!

"Government is selling India! Government is selling all our prized assets! Government is selling the country." 

Such statements from the opposition were not unexpected post the 1st Feb 2021 Union Budget with the push of BPCL, Air India etc disinvestments and further information of four PSBs up for sale being released by the Finance Minister. A working class raised in Nehruvian Socialism and a society fairly broken from spirit of entrepreneurship of ancient Bhaarat, naturally might resonate with such headlines and comments. The ghost of privatization is difficult to shake off for some but then what do we stand to achieve with it? Is it all bad or all good or is it somewhere in between? Is there a sweet-spot that one can aim for between the poles of Privatization (broadly, Capitalism) and State Ownership (i.e. Socialism)?

To answer these questions, one needs to ponder over the question, "What is any government's core job?". A government is supposed to provide for its people economically and socially while ensuring internal & external safety and security. When one says 'provide', one has to acknowledge that for anything the government has to give to Raam, it has to take something from Shyam. For anything it has to give to Laxman, it has to take from Raam and for anything it has to give to Shyam, it has to take from Laxman. This something can be a direct cash transfer as done through Kisan Samman Nidhi, it can be good roads/public infrastructure, it can be having a good night's sleep with a robust law & order system, it can be security from foreign/local terrorists so on so forth. Put simply, to provide or to spend money on welfare, infrastructure and security, government needs taxes. For the government to earn enough taxes to cover rising annual expenditure, it has two levers it can employ:

Greenwoods for the GDP

A very distant Left Liberal chachu (and I can't stress enough the importance of the word 'very') happened to remark how India was going to the dogs with a 23.9% YoY GDP contraction in Jun 2020. With all the bravado he could bring in while unable to hide the glee of India doing badly, he proclaimed how the  Titanic was sinking while Bhaktagan were busy playing the music. Having had a long experience now interacting with Left Liberals, I have been convinced that the only way to reach their minds is through green chutney demos and nothing else has even a remote chance of working. I subtly shifted the discussion from one black swan event (COVID-19 of 2019-2020) to another, i.e. the 2008 Global Financial crisis. I then took the discussion to this Left Liberal chachu being laid off in early 2009 because of the crisis and went on to remark how my dear chachu faced a record -90% YoY fall in his income for CY2009 having been unemployed for most of the year. The poor chap kept trying to defend himself all along offering one explanation or the other sharing terms like 'Act of God', 'External factors', 'company limitations', 'trying times for financial sector' etc etc. I stuck to my guns for a long time and finally he uttered the words I was patiently waiting for nearly twenty minutes, "Chaitanya, I was not working for 10 months of the year! How do you expect growth! Infact, there is going to be a contraction!". "Exactly!", I smiled! "The country was not working for some months, Chachu", I said and walked away praying he wouldn't miss the Greenwoods for the GDP!

Devil is in the Demand

In times of great trouble, more often than not, I have found that returning to nature & her laws can provide man with the requisite guidance to navigate choppy waters and ferocious winds. We are completing nearly two months of a differently regulated lock-down and we once again stand at an interesting junction that demands us to redefine our priorities and re-balance between immediate risk to lives vs. economic hardships (a longer term, more drawn out, more slow and equivalent in pain/loss if not more). As we step into a post-COVID world, Government of India is coming up with a slew of interventions & stimuli to reboot our economy. The announcements are being done in tranches and the broad theme of these moves has clearly emerged which I shall elaborate later. While some of us are upbeat, some are not glad with the announcements. During the course of this write-up, taking the Rs. 20 lac crore economic package as a context, I'd be pondering upon the role of the government, economic demand generation concerns, possible stable solution and few of the many questions that the outbreak of the #ChineseWuhanCoronavirus has possibly catalyzed. I am hoping that my loud pondering will assist the reader in exploring the events happening around and likewise aid my own thought process & development as well.

Mind over Madrasa

Which war is the ideal war? – The war that is won without stepping on to the battlefield.

It is very easy to misinterpret the above statement; for modern day “peacekeepers”, the statement is akin to not going to war at all – ever! For fanatic extremists, the statement is an excuse given by the weak. For students of Chanakya, Shivaji and Krishna, it is the principle of minimal casualties. For these students, the statement is all about understanding that the mind is the all-encompassing superlative battlefield made up of tiny zones of conflict – physical and/or emotional - this is modern warfare! The Abrahamics understood this very well and hence you can seen a transition in Christian conquests – from overt Goa inquisition style torture or brutal British subjugation to the silent dagger mechanisms perfected by the Vatican Church, based on the combination of smart economics and emotional appeal executed brilliantly by scores of missionaries particularly along the eastern belt of India. Islam too evolved to understand that wars needn’t be won on the might of the sword alone and hence came the advanced weapon of demographics as explained by Muammar Al Gaddafi - something they have successfully employed in Europe and will deliver them the continent in a few decades. However, does the Hindu understand his own legacy?

Indian Government: Your, Mine or Ours?

As a student of Finance, Debt and Equity have always been the conceptual building blocks in my studies and in my professional life. As a quick basic introduction, both are modes of financing operations of any entity. Debt financing involves provision of capital with a promise of periodic interest payments (fixed, floating or zero) and the repayment of the upfront capital along with total interest at the end of the tenure - a home loan & the EMIs associated with it are a classic example. In this mode of financing, the financier does not have any ownership in the enterprise to which the financing is provided. As against this, in Equity financing, the financier has direct ownership (either active or passive) in the entity to which the capital is provided. The most prevalent example is owning a common share of a publicly listed company making the owner of the share a shareholder in the said company and hence a proportionate 'owner' of the entity and its business. Being an owner of the business exposes one to its risks and rewards in significantly higher proportion. The cash flows are irregular more to say and the primary source of gain is from capital appreciation of the value of the business, i.e. the Market Capitalization, of the firm. Thus, more often than not, Debt has assured cash flows, fixed periodicity and lesser risks attached to it along with zero ownership in the enterprise while Equity has proportional ownership, irregularity of cash flows and higher risk/reward attached it. For the sake of this blog, I am ignoring the convertible modes of financing.

With the basic of Debt and Equity behind us, I'll proceed with a keen observation of mine which has grown stronger in the past few months, on how politics has evolved or changed in the past five years if I look through the lens of Debt & Equity. Till 2012-13 approximately, we could see the Debt Model operating in full flow while post it, the Equity model has started taking shape with increased proportion as a percentage of our total population. I am seeing comments over the social media and outside it as well which are indicative of this difference though I am yet to come across any article explicitly putting forth such an observation. Let me elaborate:

Petro Prices: Perturbed by or Perpective of?

Being a regular solo commuter driving my 'petrol' consuming bike to work every day for five days a week, let me declare upfront that I am not very happy on a personal front to bear the brunt of petrol price hike we are witnessing regularly in the past few months. The per litre cost now touching Rs. 80/-, the social media memes are expected. The angst among my countrymen too is fair, I must say; yet I believe that there is more to these turn of events than what simply meets the eye and should we not be carefully inspecting all angles before making our judgments?

Washington & Wahab....

"If you visit USA and wish to carry back a souvenir to your nation, you'd either have to carry back a missile or a satellite."

Anonymous

The above quote speaks volumes of a nation, its economy and hence its policies. This will form the core of today's blogpost. I had originally intended the post in the immediate aftermath of the Charlie Hebdo attacks. Time did not permit but for a good reason - a few more events followed globally which aids the content of this blogpost; namely - Saudi Arabia's King Abdullah's death, Barack Obama's R-Day visit to India and the continued fall of oil prices globally. In the past few months, global leaders as a collective unit have been asked a few deep questions by recent events. Some of them aced those questions while most of them succumbed to political correctness and fallacies of human nature - to cling on to a desired object. While there are many nations and its many leaders, the ones which move global policy are the ones which matter the most and hence this blogpost.

Pakistan's Psyche: Prudence & Providence II

continued from Pakistan's Psyche: Prudence & Providence I

After getting a peek into the psychology behind Pakistan's behaviour in the last post on the topic, here I am trying to put forth an audacious solution - maybe it has been thought of, maybe not and whatever the case, I am sure the Government, with the access to much more and sensitive info, would work on the best possible solution. Once before, I had mentioned the possibility of the Balkanization of Pakistan as a ray of hope for the subcontinent towards peace. Today, I wish to focus on another idea which I find more critical for long-term stability - covert intelligence eliminations or war.

Expensive Externalities

The bane of being in love with multiple things at the same time is that it is difficult to convince one of the other and ensure there is no partiality; but when the two things in concern are not humans, but streams of study, the task becomes easier. Formally, having studied engineering and finance, I have always been in love with logic, maths and reason - believing in the power of rock solid rationale. At the same time through these past 7 years, my hobby of study of spirituality, philosophy and metaphysics has intrigued me in the perceived abstractness of  the same and hence resulted into me falling in love with them too, and thus the boon. One of the beautiful results of this love for both has led me to a deep concept which fits into the logic of science and the faith/trust of philosophy/spirituality.

Reform, but Resolve too....

In the wake of major economic decisions by the Government of India many emotions, passions, opinions and expressions are flowing around. It is indeed commendable to what is happening - or rather most of it. Today, I am thinking of visiting in short all the major decisions of the past few days trying to explore as I see them and inviting opinions and counter-arguments if any. At the end of the blog today, I have shared a discovery of a unique and beautiful model; a middle-ground between the warring arguments of FDI in Retail. While doing so, I believe we can also dwelve on the difference between Idealistic & Practical schools of thought, the importance of a dual front - short and long term.

Retail : a Past Re-Tale....

A chilly atmosphere in Nasik as I write this blog; I was hoping to just check my mail and go to sleep with a blanket over my head as I enjoy the best few hours among the 24 available (and believe me that Nasik in winter is the best place 2 sleep @ night - tucked up in a blanket, warm and snug!) My plans were delayed as I read the news about the day's events. One report awakened the part in me which was asleep and helping switch off other systems too - not Harvinder Singh's brave act (that was due since long, the volcano is spitting fire) but the Cabinet approval for 51% FDI in Multi-Brand Retail is what caught my attention; and its deep economic repercussions as I see it are unpleasant. Readers might remember that I had posted about FDI in the Media Sector in my blog Media's Masters.... ; I continue in the same vein to reinforce my statement as to how this last move is another attack on our nation by Sonia Gandhi and her minions.

Colonial India : From West to East....

Hold your horses (Actually your thoughts) before you ask yourself why I have posted "India" and not Bhaarat. You will find that explanation in the subsequent paragraphs.

Digging into our history books, in our primary and secondary school days we had those lessons about how the East India Company arrived with an excuse of trading and went on to capture the entire Indian sub-continent by pitting the locals against each other in the game of one-upmanship. Things have not changed if colonialism is to be studied. It was West first; East now.

Kill Switch Engaged!

Never in my life have I been so happy to hear Asif Ali Zardari speak something. I felt satisfied when he said that the 26/11 masterminds won't be handed over to India. Thank you Mr. Zardari, you just saved us crores of rupees and in the process publicly accepted that you have identified the culprits and shuttling their cases till the time world forgets about them.

The world might forget it, but we won't. I am rather glad that Pakistan will keep them safe so that WE will hunt them down one day. It is really an altogether different joy to destroy the target in its den. Moving over to where this statement was actually said, I hear the dog is once again snivelling at the feet of its masters in Beijing begging for a few Nuclear reactors and some stupid rail link both with the purpose of entrenching the curse of Extremism in this nation. Keep it going!

Speaking of Bejing, I really admire the methodical plans they set up and implement. Leaving aside their anti Bhaarat policies till the end of this sentence, all of us should really salute their world tactics and take a leaf out of their books. Ok! That's it, back to the topic!

China has got the US by its throat. Are you wondering how? Well, here it goes......

Fueling Growth by Fueling Prices....

Economic and Political Sense prevails!
I appreciate the decision of the Union Government to decontrol petrol prices and hiking other fuel prices. I have read and heard many comments and remarks against this story and hence felt the need to share and discuss it with all of you on the blog.
I do not know whether this decision was selfish or selfless, whatever it was it is in the best interests of the nation.
There is a dialogue by Amitabh Bachchan in the movie Sarkar, "One should be able to foresee a future loss before the present day gains." This situation is similar.
Are we aware of what the Government goes through to provide fuels at subsidised rates? Are we aware that state run Oil Manufacturing Companies are running into severe losses because of the suppression of fuel prices till date? How many of us know that Reliance Industries and Essar had to shut down their retailing stores due to the huge differences in prices between their stores and state run retails? Take a scenario where we are vada pav vendors under government control. The total cost incurred to procure raw materials, cook and serve 1 vada pav is say Rs. 5/- and then the government issues directives where the max selling price be less than Rs. 5/-. So, we are in loss and would eventually shut it down, the only logical option then. How would we feel then? Would not there be resent in our hearts?
How many of us know that the gas supplied to us for cooking is nearly charged 50% (approximately Rs. 300/- which is subject to location and other factors) of its actual price (i.e nearly Rs 600/-)?