[SmartCat]

Originally Posted by Samurai

This is scary, let's hope it doesn't happen. We are yet to fully recover from the 2008 disaster.
https://www.msn.com/en-in/money/news...BNE8Lq?ocid=sw

I wouldn't hold my breath. He has been saying this from the past 8 or 9 years now. Peter Schiff is often deridingly called perma-bear (always negative about economy).

Here is an analyis of his part predictions:
https://www.cnbc.com/2015/12/20/the-...edictions.html

And oh, he is a Gold Bug like Mike Maloney, Jim Rogers etc
https://schiffgold.com

What's different is that he was talking about hyperinflation all these years. But now, he is talking about Great Depression. That's an amazing U-turn. Not sure how Gold will help if there is depression, because it is basically fall in prices of commodities.

However, he has identified certain risks (all that debt) in global economy correctly. Not sure how it will all pan out.

[Samurai]

Originally Posted by smartcat

However, he has identified certain risks (all that debt) in global economy correctly. Not sure how it will all pan out.

I don't care about his gold obsession. But the debt of that order is bound to hurt us hard, especially when a clueless man is in charge of US economy.

[SmartCat]

Gita Gopinath appointed IMF Chief Economist
https://economictimes.indiatimes.com...w/66031877.cms

Gita Gopinath has been named as Chief Economist of the International Monetary Fund (IMF), becoming the second Indian to be appointed to the position. Former RBI Governor Raghuram Rajan had served as Chief Economist of the IMF. Gopinath has authored some 40 research articles on exchange rates, trade and investment, international financial crises, monetary policy, debt and emerging market crises.

Born in December 1971 to Malayalee parents, Gita had her schooling in Calcutta and graduated from the Lady Shri Ram College of Commerce in Delhi. She did Masters from the Delhi School of Economics as well as from the University of Washington. In 2014, she was named one of the top 25 economists under 45 by the IMF and was chosen as a Young Global Leader by the World Economic Forum in 2011.

Originally Posted by Samurai

But the debt of that order is bound to hurt us hard, especially when a clueless man is in charge of US economy.

This article explores the risks in global economy:
https://economictimes.indiatimes.com...w/66013796.cms

Highlights:

- Key risk factor is voracious borrowing by corporations and emerging market economies
- Debt held by S&P 500 corporations has risen to 1.5 times earnings since 2010, near peaks that preceded past recessions.
- The typical privately-held corporation purchased by private equity investors in that time is leveraged to six times earnings, twice what a ratings agency would consider junk
- A drop in stock prices back to their historical averages from current dizzying heights would eliminate $10 trillion of US household wealth, slashing consumer spending by about $400 billion, and cutting two percentage points off GDP growth
- When the American markets start feeling it, the results are likely be very different from 2008. Corporate meltdowns rather than mortgage defaults, and bond and pension funds affected before big investment banks.
- Neither the Federal Reserve nor Congress are in a position to do much to respond, since there is little room to cut interest rates, and the government deficit and debt are high
- Central bank balance sheets went from $5 trillion to $17 trillion in the last decade, swelling the value of global markets to $290 trillion, or a record 360 percent of global Gross Domestic Product

[peus017]

Originally Posted by Samurai

I saw this ancient parable show up again in the price myth thread. I see this every couple years in defense of republican tax cuts. But this is a simpleminded parable that makes couple of false assumptions.

1) Poor men and rich men drinking in the same bar, drinking same quality drink. Hmm, in which society does that happen? Usually the rich guy drinks something 10-50 times more expensive compared to the poor guy. Stays in homes that cost 10-100 more expensive. That is why rich guy pays more, and while enjoying 10-100 times more valuable benefits as the poor guy. Do you want Ambanis to pay the same amount of tax as you? Do you think you are enjoying same benefits as Ambanis?

2) Rich man will leave. Can he really leave? He is making his riches by the help of all the people around him. If Ambani leaves the country to escape the taxes, most of his business empire can't leave with him. His businesses are making huge profits off Indian citizens and Indian resources. So one shouldn't be under the assumption that the rich man can leave, when his income depends on being here.

This is more of a example to quote how tax system works !
I bet everyone agrees that they dont drink in the same bar or live in a similar house, but products usage can be common. The whole thread is a pointer to bring more people under tax umbrella so that its divided and it brings transparency, accessibility to services for the people who pay taxes honestly.

If we pay taxes we expect the government to provide basic facilities and right use of our money. Thats It !

[Samurai]

Do people have to be above a certain height before they are allowed take a roller-coaster... I mean make economic policy decisions?

The answer is NO, irrespective of the new guideline Donald Trump has set.

https://www.cnbc.com/2018/11/28/trum...so--short.html

[SmartCat]

Originally Posted by Samurai

Do people have to be above a certain height before they are allowed take a roller-coaster... I mean make economic policy decisions? The answer is NO, irrespective of the new guideline Donald Trump has set.

Height of the FED chief has strong correlation with interest rates set during their tenure. Looks like Trump did not get this memo:



Since Trump likes lower rates, he should have picked somebody shorter than Yellen.

[Jeroen]

Originally Posted by smartcat

Height of the FED chief has strong correlation with interest rates set during their tenure. Looks like Trump did not get this memo:



Since Trump likes lower rates, he should have picked somebody shorter than Yellen.

I thought I would never ever understand economics. But this has totally cleared up all my confusion and lack of understanding of economics!

Got it! Thank you!

Jeroen

[Samurai]

Originally Posted by smartcat

Height of the FED chief has strong correlation with interest rates set during their tenure.

Originally Posted by Jeroen

I thought I would never ever understand economics. But this has totally cleared up all my confusion and lack of understanding of economics!

But correlation is not causation. Even Trump knew that.

[Jeroen]

Originally Posted by Samurai

But correlation is not causation. Even Trump knew that.

What are you saying? This is fake news?

[Samurai]

Originally Posted by Jeroen

What are you saying? This is fake news?

No, it is not fake news. Although there was strong correlation, Trump decided shorter stature doesn't mean lower interest rates. So we can conclude that Trump doesn't think correlation = causation, assuming he was even aware of the correlation.

Trump mainly judges people by appearance, must be due to his long association with Miss USA pageant.

[SmartCat]

Former Fed Chair Yellen says excessive US corporate debt could prolong a downturn
https://www.cnbc.com/2018/12/11/jane...-downturn.html

Here we go again:

In an interview with economist Paul Krugman, Yellen said much of the underwriting for the $9.1 trillion in corporate debt looks "weak." I think investors hold it in packages like the subprime packages - the same thing has happened. It's called CLOs, or collateralized loan obligations," she added.

[PGA]

Friends, there is some empirical evidence that is considerably disturbing me. It's wholesale prices of fresh vegetables that I grow. They have been on the downhill path for last two years and now have nosedived. I went on doing bit of on ground research albeit elementary and they point to something that is little alarming. If I may narrate some of my findings,

- amount of production and arrivals in the mandi has not been anything out of normal. Source: Market committee data, which seem highly unreliable though and word of mouth information sourced from few commission agents.

- There has been minimal lowering of prices at retail end even though wholesale prices have gone down by as much as 20-40% during the corresponding period.

- Some wholesalers and commission agents mentioned of substantial reduction in number of sub wholesalers due to their inability to raise requisite working capital required to carry out daily trades.

- Severe lack of liquidity in the market due to which long distance trades aren't happening or the lot sizes have considerably decreased, leading to glut in local areas.

- Lastly, general lack of trust and some fear as well due to myriad reasons such as political, social etc leading to fall in people willing to lend on credit.

- Rise in business bad debts in areas dependent on earnings of agri sector. Source: Local small businessmen managing pesticide/fertilisers etc businesses.

These observations are from three local mandi's around my area and two of them are among the top 15 mandi's of the country. Needless to say that I'am talking about completely unorganised sector of our economy, but this sector employs and feeds a very large section of our populace. My specific queries are:-

- Do my observations match with others who watch Indian economy more deeply and closely. My observations could be suffering from all infirmities for obvious reasons and could be completely wrong as well.

- If the economy is progressing close to 8%, why is food sector deflating, that too fresh vege space which has no global ramifications.

- Is the data from unorganised sector getting captured and reflected in the official figures that Govt puts up.

- Are we looking at any incoming economic slowdown which in my opinion will travel from unorganised to organised sector due to interdependence.

I need these answers not for any academic exercise but to firm up my growth plans and will be grateful if some of the esteemed members could shed some light on the issues and share their expertise.

[SmartCat]

Originally Posted by PGA

I need these answers not for any academic exercise but to firm up my growth plans and will be grateful if some of the esteemed members could shed some light on the issues and share their expertise.

1) Your findings on liquidity is correct. PSU Banks are not lending to small traders. Rural focussed NBFCs used to lend but they have a tough time accessing funds too. New RBI Governor at the helm might ease liquidity. Do report back on your findings after 3 months.

2) Data seems to suggest that there is food deflation. Not sure what weightage vegetables have in this index, but it is likely to be low.



3) Food deflation is mentioned frequently in business news too.

https://indianexpress.com/article/in...y-now-5134049/
https://www.hindustantimes.com/opini...XwMGmfZtL.html
https://www.moneycontrol.com/news/bu...e-3285951.html

[rovingeye]

PGA -

My observation is that vegetable prices tend to have an element of seasonality - winters usually bring cheaper prices. But, being a producer I think you know that better than me.

However, if you're saying that wholesale prices have crashed (and that did show on the recent wpi numbers as well) and I can confirm that hasn't quite happened in the retail end, then it must mean that the middle men are becoming fatter.

And given that crude is off of the highs quite substantially, that should have reflected in retail prices as well - which like I said hasn't happened either.

Apologies for not being able to solve your quandary. But I strongly suspect profiteering by the evil middlemen in the supply chain.

[mallumowgli]

Originally Posted by rovingeye

PGA -

Apologies for not being able to solve your quandary. But I strongly suspect profiteering by the evil middlemen in the supply chain.

Or it could be that though the demand at the retail level is there, the middlemen is short of cash to finance the purchase from the growers