To make matters worse, Rajan has been appointed the head of the Central Bank of India. An authority on the subject known to many of you says to expect a wave of privatization.
On Thu, Sep 5, 2013 at 7:34 PM, michael perelman < [email protected]> wrote: > To make matters worse, Rajan has been appointed the head of the Central > Bank of India. An authority on the subject known to many of you says to > expect a wave of privatization. > > > On Sun, Sep 1, 2013 at 11:04 PM, Patrick Bond <[email protected]> wrote: > >> (This writer is often shrill, but often has interesting insights amidst >> strange rightwing politics.) >> >> >> India pushes 'shock and awe' currency plan to save BRICs >> >> Submitted by cpowell on 07:58AM ET Sunday, September 1, 2013. Section: >> Daily Dispatches >> >> By Ambrose Evans-Pritchard >> The Telegraph, London >> Sunday, September 1, 2013 >> >> http://www.telegraph.co.uk/finance/currency/10277392/India-pushes-shock-. >> .. >> >> India is pushing for joint "shock and awe" intervention by key >> developing states to halt capital flight and shore up currencies in a >> move that risks backfiring and triggering a vicious spiral. >> >> "It is going to happen in a matter of days rather than weeks. Brazil and >> India can start the move," said Dipak Dasgupta, a top Indian official. >> >> Mr Dasgputa told Reuters that China, Brazil, India, Turkey, Russia, and >> South Africa have all been squeezed as the US Federal Reserve prepares >> to tighten monetary policy. Joint action would give emerging markets >> greater firepower, allowing them to deploy their combined $8.7 trillion >> of reserves and crush "speculators" rather than being picked off one by >> one. >> >> ... Dispatch continues below ... >> >> >> >> However, it is unclear whether such action would serve any useful >> purpose if the real problem is exhaustion of catchup growth models in >> these countries and boom-bust credit cycles. "This could backfire," said >> Ian Stannard, of Morgan Stanley. "If they did this, they would have to >> sell US and European bonds and that would push up yields. It was rising >> yields that started this process in the first place." >> >> The side-effect of such intervention would be monetary tightening, >> pushing countries into deeper trouble. India's growth fell to 4.4 >> percent in the second quarter, the lowest since the post-Lehman crisis >> in 2009. This is eroding tax revenues and pushing the budget deficit >> back over 5pc of GDP, with a ratings downgrade looming. >> >> "We are no doubt faced with important challenges," said Indian premier >> Manmohan Singh. The rupee is in freefall, crashing 25 percent over the >> past four months to a record low of 68.84 against the dollar. >> >> "Populist fiscal policies have come back to haunt India," said Kunal >> Kundu from Societe Generale. Food and fuel subsidies are gobbling up >> much of the budget, while investment atrophies. India has been living >> beyond its means, with a current account deficit of 4.8 percent of GDP >> last year. Mr Kundu said India needs large inflows of capital just to >> cover its short-term external debt, yet hot money is leaving. >> >> Officials have floated plans to use India's gold reserves as collateral >> for loans from the International Monetary Fund, but the IMF would demand >> deep reforms and cuts in subsidies. >> >> "The Indian authorities have made a complete mess of policy," said Lars >> Christensen from Danske Bank. "They are trying to defend a quasi-peg for >> the rupee instead of letting the currency reflect fundamentals." >> >> It remains to be seen whether other countries will join forces with >> India. South Africa has signalled support, but Brazil's central bank >> said it was unaware of any plans. Peter Attard Montalto from Nomura >> dismissed the rumours of joint action as "noise" from politicians >> clutching at straws. "We are very sceptical," he said. >> >> >> _______________________________________________ >> pen-l mailing list >> [email protected] >> https://lists.csuchico.edu/mailman/listinfo/pen-l >> > > > > -- > Michael Perelman > Economics Department > California State University > Chico, CA > 95929 > > 530 898 5321 > fax 530 898 5901 > http://michaelperelman.wordpress.com > -- Michael Perelman Economics Department California State University Chico, CA 95929 530 898 5321 fax 530 898 5901 http://michaelperelman.wordpress.com
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