Monday, August 31, 2015

Is It Working?

Performance of the Dow Jones Industrial Index ...
Performance of the Dow Jones Industrial Index during Black Monday (Photo credit: Wikipedia)
the snake oil sold as remedy for a sputtering world economy after 2008 isn’t working..... After the sub-prime crisis in the US and the steep fall in markets following the Lehman Brothers bust, the world has tried to solve the problem by throwing more and more money at the problem – money printed and lent out at near zero interest rates almost all over the developed world. ...... China, with its export engine struggling, has been extremely unsuccessful in shifting its emphasis to domestic consumption-led growth. ...... in the absence of a more fundamental re-balancing of real economy incentives and the return of covert mercantilism among countries, it is the financial markets that fed themselves on zero-cost money. ..... the cheap money was used by companies and financial institutions not to lend to companies creating jobs, but to make money from money – which means financial investments like stocks and bonds. ...... More financial wealth has been created over the last seven years than probably in the previous seven – and this when the world isn’t growing too strongly. The Dow Jones Industrial Average hit a new all-time high of 18,312 this May, up from the November 2008 low of less than 7,450. ...... When there is so much money to be made from money, who in his right mind will put up factories and roads in the hope that they will yield a positive return? ....... while keeping money cheap after Lehman was the right short-term response, the obvious mistake western governments made was to let monetary policy do all the hard work, and letting fiscal policy hibernate. If you want to revive growth, you need people to invest and consume, not speculate. When the private sector was unwilling to invest and people in excessive personal debts were trying to bring leverage levels down, the logical thing for the US to do was to invest in infrastructure – which is what India is trying to do now – in order to correct what is called a balance-sheet recession. ....... By first world standards, US infrastructure sucks, and a half trillion dollars spent there would have done more to revive growth than spending the same in rescuing banks and no-hopers....... This is where doctrinaire approaches to what government should do or not do does not help. When economic confidence wanes, the only entity that can act is the government, which technically can spend even without having the money. The Right may not like it, and the Left will crow, but that isn’t the point.

When nothing works, the government has to work.

........ The US government left the Fed to do the heavy lifting instead of chipping in with public investment boosters. The Tea Partyists and the Paul Krugmans and Occupy Wall Streeters got into a Left-Right argument which didn’t help. ......... the global rebalancing that should have happened after Lehman - where the strong exporting countries exported less and consumed more, and the high importers exported more and consumed less – has not happened. Both Germany and China – the two main problem countries – are stuck in currencies that are artificially undervalued. Germany is the most competitive country in the Eurozone, and as long as the zone retains its common currency, the rest of the EU cannot correct the imbalance............ For Germany to import more, it has to get out of the Eurozone, or the weaker elements in the Eurozone have to exit and develop competitive currencies that reflect their true competitive abilities. In the case of China, its recent devaluation of the yuan shows that it is still in an export mindset. China should actually upvalue the yuan and allow more imports so that domestic consumption grows and helps the world. China and Germany have to change course to help the world........ the failure of this economic rebalancing is leading this time to entire countries coming close to collapse. The PIIGS (Portugal, Ireland, Italy, Greece and Spain) and the oil sheikhdoms are under threat as Chinese demand collapses, reducing commodity prices all over. As a Deutsche Bank study noted some time back, Saudi Arabia needs oil prices at $99.2 to fiscally break even............ For Bahrain, Oman, Nigeria, Russia and Venezuela, the fiscal breakeven prices are $136, $101, $126, $100 and $162 respectively........ the Chinese are unable to grapple with the new challenges that come with becoming the world’s second largest economy and key driver of demand. Two issues are paramount: one, there is huge financial repression, where Chinese savers are paid low returns and the cheap money raised from them has been invested uneconomically in unwanted infrastructure; and two, while financial repression helped fund investment-led growth over the last three decades, today it is constricting consumption – which is what China needs to boost internal growth. .......... China has to do the opposite of what it is doing – cutting rates to boost growth. Instead it needs to raise lending rates so that overinvestment halts and consumption is given a boost. A China that consumes more (and invests less at home) will become the world’s growth engine once more. ......... India .. must do five things. One, use higher taxation of cheap oil to boost government revenues for public investment. This situation of ever-cheap oil won’t last forever. Two, recapitalise and privatise some banks so that the lending cycle can resume. Three, generate resources for growth by shifting more subsidies to cash (after LPG, kerosene, food and fertiliser are obvious candidates for huge savings by eliminating wastage and mis-targeting). Four, get states to start moving on land and labour reforms, till the centre itself is able to act when its Rajya Sabha numbers are better. And five, consistently improve ease of doing business. There should be a permanent secretariat constantly liaising with business to eliminate the pain points.
This guy R Jagannathan is brilliant. More brilliant than Paul Krugman in some ways.

I was reading this: Why both Modi and Kejriwal are misinterpreting their massive mandates.

I liked it so much, I looked up the author's name, clicked on it, and that is how I came across this: The global economy is crashing and here's how India can benefit from it.

And I liked it so much, I splurted out the b word.

He mirrors some of my thoughts in late 2008, early 2009. America needed a three trillion dollar stimulus in 2009, the major chunk of it going into taking every human being online. I blogged so.

If the world comes to an end, due to Global Warming, or a Nuclear War, or whatever, we will have the Republican idiots to blame for it, if we are still around.

Here's a sample.

Sunday, August 30, 2015

Hardik Patel Is Not A Movement

And Narendra Modi is no fluke.

I have not had a chance to dig deep into Hardik Patel. But on the face of it, I see hundreds of thousands of Patels rallying around a 22 year old who scored 50% on his B.A. exam. These are men unhappy that their state has a woman Chief Minister. It does not matter that she is a Patel herself.

I am currently engaged in a debate in Nepal where I am arguing for a dynamic formula on reservations, one with a sunset clause. Once a community makes headway and achieves parity, the reservations are dropped for that particular community.

But reservations affect only a small portion of the targeted communities. Most of the people will be helped in the private sector. The jobs that the private sector will create will do much of the heavy lifting. And Modi is focused on that like a laser beam.

Patels are the most famous Indians in America. They seem to be doing fine. They are no Dalits.

I have watched attacks on women like Irani, the Foreign Minister and the Rajasthan Chief Minister, half the time those sexist attacks come from within the ranks. Goes to prove the point India is a terribly sexist country. It can not become a world power by continuing on that path.

It makes Modi look good that he picked a woman to be his successor. She should be judged on the merits. I have not looked at her record either. But I agree with her decision to not budge to Hardik Patel. He is a flash in the pan.

The Patels should take pride in a woman Patel Chief Minister. For a moment I was comparing Gujrat to First World countries, I am going to stop now.

भुटान में एक होता है Gross Happiness Index. मेरे को लगने लगा है भारत में भी कोइ Gross Democracy Index शायद है। देशके अर्थतंत्र को मजबुत बनाने की कोइ फिकर नहीं। रैली अटेंड करो बस उसी से शायद मोक्ष प्राप्ति हो जाती है। चाहे मुद्दा कुछ भी हो। करप्शन खत्म ना हो लेकिन करप्शन पर रैली कर दो, हंगामा कर दो। वो हंगामा खत्म तो नया मुद्दा ढुंढो और फिर से हंगामा मचा दो।

एक औरत चीफ मिनिस्टर है तो इन पटेलों की मर्दांगी को ठेस पहुँच रहा है। That is all I am seeing in this non phenomenon.

मोदी शायद बिहार में हार जायेंगे। लेकिन २०१९ में हारते हैं तो न्यूज़ है, २०१५ तो प्रदेश का चुनाव है। I will give Modi two more years before I judge him.

America's politics is Gulf Of Mexico. India? South Pacific with the strong winds and the gigantic waves. Turning around the Titanic was easier. This oil tanker is hard to turn around. Modi is at least trying.

Cocky and confused: Why Hardik, the newest Patel icon, disappoints
he is underwhelming in person .... an accidental hero. .... does not know where he stands in the reservation debate. “The youth of our community are not getting jobs because of reservation,” he told reporters on Sunday. Asked whether it should go, he replied in the negative. “We need quota in government jobs otherwise millions of our educated boys and girls will not get jobs,” he added....... “All castes should be given reservation.” ..... Reminded that the government cannot breach the 50 percent ceiling on reservation as ordered by the Supreme Court, he said: “It (the court) can sit at night for a terrorist but not for us. We want quota at any cost. If others also need it they should come forward and join us.” ...... at the time of the Mandal movement, which the community opposed with great force .... I am not a politician and have not any intention to become one.”
'Kitne haath tode maine, maloom?' Meet Hardik Patel, Patidar poster boy and man without a plan
Nothing prepares you for the disappointment of meeting Hardik Patel, the 22-year-old leader of the Patidar reservation movement....... a young man inspired by violence, street-vigilantism, parochialism and contradictory, confused notions of injustice. He comes across as a disturbing mix of his idol Bal Thackeray's politics and Raj Thackeray's methods. Maybe, his movement is the precursor to the launch of the Gujarat model of Shiv Sena. ...... "The day we find out who is the General Dwyer of the Jallianwallah Bagh of Ahmedabad (the man who ordered police action against Patidars on August 25), we will kill him" ..... Hardik Patel owes his rise to the vigilantism of the Sardar Patel Group, aptly called SPG, an organisation that claims to protect members of his community from lukkhas (bullies and petty criminals). "If somebody touches our women, we break their hands. Kitne haath tode maine, maloom?" he asks. ....... His father sells submersible pumps to keep the family afloat; his younger sister, who failed to get a scholarship even after "topping her matriculation exam", is believed to be the inspiration behind his own struggle. ...... "When you see him, you will wonder, is this what India has come to? You will be underwhelmed" ...... Yet, it is

disappointment at first sight

. ...... I almost glide past him, ignoring the anti-Mandal messiah completely..... "I am going to Delhi," he replies. Is it to scale up the movement, interact with leaders of Gujjar and Jat communities, Patidars from other states? "No, I have been asked to appear in Aap Ki Adalat (a TV show). So, I will go when they send the tickets," Hardik Patel reveals his next move. ...... And then the interview is seemingly over. Hardik buries his head in a mobile phone and gets busy doing what most of the youth his age do: chat with friends on WhatsApp. "You speak to Chiragbhai," he says and starts punching the keypad furiously. .......

calls Nitish Kumar and Chandrababu Naidu fellow Patidars

..... argues there are 27 crore Patels in India and their influence decides outcome of 118 Lok Sabha constituencies and, when asked if the RSS is behind the movement, jokes that Mohan Bhagwat calls him daily. ...... He talks about how the Patidars have become desperate because of acquisition of their agriculture land for urbanisation and industrialisation, and the failure of traditional businesses because of competition from online retailers. ..... The story of diminishing opportunities in rural areas, sale of agriculture land, either under distress or for government projects, and the rising competition for government jobs and admission to professional courses can be heard in almost every corner of India. ....... "Patels know they have run out of options. Agriculture can't sustain them. Education under Gujarat's self-finance system is expensive, admissions cost money and many Patels are forced to sell their land for it. But, in the end, spending a fortune on education doesn't help either. Admissions to good, job-oriented courses is tough, government jobs can't be secured without bribes. The entire system is unjust, it leads to financial misery and ruin," he says. ......... "People are selfish. When we break the hands of people who touch our girls, everybody supports us because they know their family could be next. It is the same with reservation. Patels have begun to realise that today it is their neighbour's son who is getting destroyed by the system; tomorrow it could be his son's turn. So, they have united."...... Hardik Patel's politics, steeped in violence, retribution and the philosophy of "breaking up every hand that attacks the dignity of Patel women and future of Patidar men" is a counter argument to the pre-Independence legacy of Gujarat. Is this what India has come to? ..... Hardik Patel has left now, whizzing away in an swanky, expensive SUV. ..... Men will be men. And, in politics, boys will be boys!
Hardik Patel arrives in Delhi with designs on turning his Patidar agitation into a national movement
members of the Patidar community from 10 Indian states. Hardik Patel claims the Patidars are spread in several corners of India — from Rajasthan in the north to Andhra Pradesh in south — they number nearly 27 crore. “The Kurmis of Bihar and their leader Nitish Kumar is ours; the Andhra Pradesh Chief Minister Chandrababu Naidu is also part of the Patidar family,” he says. .....

The Bihar CM has already supported the Patidar movement

..... The success of the Ahmedabad rally — he claims there were 18 lakh Patels in the Gujarat capital for the event — has further emboldened Hardik. ..... Ahmedabad-based journalists say that until a few days ago, nobody had even heard of Hardik or his movement. But the young leader from a modest family of Viramgam suddenly appeared on the horizon with the support of thousands of supporters, whose numbers later swelled to nearly a million. ..... The Patels are known to be a clannish, closely-knit community in Gujarat. ...... Hardik claims he built the movement from the ground up by addressing dozens of rallies in Gujarat's villages and towns, before converging in Ahmedabad. The first rally, he says, was organised on 6 July with the support of 25,000 people; after that, the numbers kept growing exponentially. ..... He claims Bal Thackarey and Bhagat Singh are his heroes, and VHP leader Pravin Togadia an inspiration. ..... the real force behind the movement is the RSS. A report in Gujarati daily Divya Bhaskar claims the Sangh has propped up Hardik to turn reservation into an pan-India issue. "The Sangh's objective is to initiate a debate on the caste-based reservation policy and then prepare grounds for its replacement with socio-economic criteria" ...... The Shiv Sena has hailed him as Gujarat's hero. In an editorial on Friday, the party mouthpiece Saamana called him

the new "king of crowds".

Hardik Patel's quota battle is only an excuse, a stick to beat Narendra Modi with
when it comes to reservations, it’s always serious business in India......

Modi’s haters are waiting for Emergency just like Modi’s fans are waiting for Achchhe Din.

..... Emergency was preceded by a student movement called "Nav Nirman" in Gujarat. People were out in the streets protesting against the government of that time, and protests would often turn violent. .... The Surat unit of Aam Aadmi Party had already supported him. Nitish Kumar has also supported him last Tuesday. ..... All the nuances that were visible and audible prominently when Jats demanded reservations or

when Gujjars went full Rambo on railway tracks

will be missing when discussing Patel’s agitation, because this is something that is supposed to weaken Modi’s fort at his home. Nothing else matters. ....... "A Patidar (Patel) student with 90% marks does not get admission in an MBBS course, while SC/ST or OBC students get it with 45% marks." ..... Hardik Patel has come up with the "post-Mandal injustice" .... The fact that Hardik Patel has been able to organise such a big crowd, which only likes of Modi could manage in Gujarat earlier, shows that this feeling of injustice is real. ..... The probability of a taxi driver or watchman in Mumbai being a Mishra is as good as him being a Yadav. And when this Mishra and Yadav go back to their villages, the boundaries increasingly blur. ..... I’d still support caste based reservations, especially for Scheduled Castes. ..... OBCs have acquired political power and clout, which SCs have not been able to. ..... I’d propose that in case of OBCs, the primary criteria should be made economical i.e. 27 percent seats are reserved for economically weaker sections, with preferential allotment on the basis of caste. So a cutoff is created not based on caste, but based on economic status, but preference is given to OBCs (because you can’t wish away castes in entirely yet) in that list.
Hardik tries to scale up his agitation to national level
“Just as Sardar Patel united scores of small principalities and Kingdoms in British India to become one country, I will make sure that we, the vanshaj (descendents) of Sardar Patel unite all communities agitating for OBC status and present a national front,” he said to a room full of Gujjar leaders from across eight states in Gujjar Bhavan in Patparganj, East Delhi. ...... a clear move by him to acquire a national persona and invoke a common spirit of the dominant peasant castes across the country who feel that the current state of agriculture, falling farm incomes and educational backwardness will keep them out of the developmental bandwagon.
Why both Modi and Kejriwal are misinterpreting their massive mandates
India is on the threshold of another “million mutinies”, to use VS Naipaul's evocative phrase. The ongoing agitations by ex-servicemen over OROP (one rank, one pension) and the Patidars of Gujarat for job reservations, and the oncoming public sector strike are symptoms of this mutinous on-rush. Further ahead, there is every chance that the rural distress over unviable small-time farming may also come to a boil, even though the contentious Land Bill has been defanged and possibly sent into cold storage....... it is more than likely that the revolt brewing in many parts of India are against an inept political system and the complete lack of credible leadership in all parties. ...... a continuation of the citizen mutinies that began around 2010-11 with the Anna movement, the overthrow of the Left Front in West Bengal and the DMK in Tamil Nadu, and the gathering storm that peaked in 2014-15, resulting in the rise of two politicians - Narendra Modi at the centre, and Arvind Kejriwal in Delhi. ....... Political pundits are fond of saying that the old Indian anti-incumbency syndrome – where voters kept defeating incumbent governments every five years – had changed in the 2000s once a few politicians started delivering some degree of governance and development. ...... the aspirations of the newer generations are no longer about obtaining rudimentary public goods like roads and power, but something more – education, health, jobs, and higher incomes ..... most mandates tend to get misinterpreted in India’s first-past-the-post (FPTP) electoral system where small vote swings result in large gains in seat shares. In UP, for instance, the Samajwadi Party got a roaring majority in 2012 on a vote share of less than 30 percent. The AIADMK won an overwhelming majority in 2001 with less than 32 percent of the vote – the vast majority still voted against it; it lost badly in 2006 even with a 1 percent rise in its vote share. The 2011 mandate, where it won 150 seats on a 38 percent vote, was 6 percent below its best-ever performance in 1991. When Mamata Banerjee sent the Left Front packing in West Bengal in 2011, the Left’s vote share was a massive 41 percent – hardly a big mandate for change (“poribortan”). ...... to interpret Indian election results as massive mandates in favour of one party or the other is always a mistake. All mandates are conditional on leaders delivering credible performance quickly. ..... That neither Modi nor Kejriwal has done so is why we are seeing the eruption of new forms of discontent in many places. Modi has not changed the way government and central government do business, and Kejriwal has reduced his party to a one-man show, and has now fallen back on traditional vote-bank rhetoric to avoid having to take responsibility for his own failures. ........ neither has so far lived up to expectations. ..... take the case of Kejriwal. He has done nothing beyond what a Sheila Dikshit or a BJP Chief Minister would have done, by making higher provisions for power and water subsidies and higher allocations for education. He has forgotten all about his Lokpal bill, and has, in fact, focused all his rhetoric on fighting with the Lt Governor when he could have spent the time more usefully delivering on his mandate. He must think the voters of Delhi are stupid enough to buy his rhetoric when he is busy schmoozing with Nitish Kumar in Bihar as though what happens in that state is more important to his politics in Delhi than what he does with the power he does have. Sheila Dikshit was seen as a good CM most of the time because she delivered within the power constraints. But Kejriwal is busy trying to shift the blame. His high-profile fallout with Yogendra Yadav and Prashant Bhushan surely has not gone unnoticed by voters. Kejriwal is clearly trying to target Modi and the centre in order to deflect public anger away from his own performance to another target....... The agitation against the land bill is less about fears of land confiscation and more about unviable agriculture and the lack of exit opportunities from it without being shortchanged by politicians on land prices...... Modi and Kejriwal will fail if they interpret their mandates as being about delivering freebies and not about creating a new politics that people can understand and believe in. India will pay a high price for their respective failures to understand their mandates. The mandate is for more honest politics, not more unbelievable promises........

Modi’s mandate is about change, and the first change needed is in the way politicians explain their policies – both success and failures - to the public.

.... Kejriwal’s mandate is about delivering honest politics, not constant battles with the central government. His post-February politics have been dishonest and unnecessarily anti-centre. He won’t be forgiven by the voters of Delhi if he continues along this path and fails to deliver.