[extreme_torque]

Originally Posted by V.Narayan

Perspectives differ. Maybe my hope stems from having seen times and regimes which were equally bad and seemed (at that time) that they would never change --> 1975-77; 1979-80; 1989-91 and seen how the fabric of the nation pulls itself together in a million ways and how change, nursed in wombs not seen easily, comes forward to right what's wrong. It takes time. It seems everything will go south forever - and for sometime it sure does. I am hopeful. We don't need to argue. We can each carry our own thoughts. As this is an apolitical forum I won't explain further. To each his own perspective and hope.

Sir there will always be good and bad people in politics but my pessimism is coming from the state of our institutions or the so called pillars. I wasnt born in 1975 but I did read how IG was disqualified from the elections for merely, in today's context, for using government employees to build dais for her election rally. A state of emergency was next which will always remain a dark chapter in the Indian democracy but for the sake of argument, it was not outside the constitution either (Article 352). What we have now is a state of emergency without admission with the government of the day using draconian laws putting anyone in prison at will and the grave state of our autonomous institutions essential for running a functioning democracy such judiciary including the highest court in the country or even the election commission whose task it is to conduct free and fair elections. I still dont trust EVM's.

[Sutripta]

Originally Posted by extreme_torque

Sir What we have now is a state of emergency without admission with the government of the day using draconian laws putting anyone in prison at will and the grave state of our autonomous institutions essential for running a functioning democracy such judiciary including the highest court in the country or even the election commission whose task it is to conduct free and fair elections. I still dont trust EVM's.

Counterpoint - What we have now is that the majority (with what seems to be a significant margin) are happy with the current (noneconomic) situation. And even happier at their vision of tomorrow.

Re: EVMs. My view - probably have a lot of theoretical lacunae, but are OK as long as the Election Comission discharges it's mandated duty without fear or favour. So question becomes one of faith in the EC.

Sutripta

[avishar]

Originally Posted by extreme_torque

I still dont trust EVM's.

Since when did your mistrust in EVMs start?

[extreme_torque]

Originally Posted by Sutripta

Counterpoint - What we have now is that the majority (with what seems to be a significant margin) are happy with the current (noneconomic) situation. And even happier at their vision of tomorrow.

India has first past the post electoral system, so even if the incumbents got 40 odd percentage of votes, it was still rejected by 60 percent which constitute the rest of the voters. I would not call it a majority

I also know what you mean which is why I hope someday they will see the light. If not we are going into a dark alley anyway.

Originally Posted by Sutripta

Re: EVMs. My view - probably have a lot of theoretical lacunae, but are OK as long as the Election Comission discharges it's mandated duty without fear or favour. So question becomes one of faith in the EC.
Sutripta

Given the first past the post electoral system, the difference between a winning candidate and a loser could just be 1 vote. Behavioural theories suggest that, for e.g. people are more likely to vote for a candidate which has education in his agenda if the polling centre happens to be a school or a college or an educational institution so it makes it all the more imperative that EC does its duty in conducting are free and fair elections. What I saw in 2014 or 2019 was not either free or fair, not by a long shot. The latest example being an EC officer who refused to clean chit the current dispensation and had witch hunt started against his family. Poor guy resigned from his post and has joined a development bank in Asia.

Also given the first past the post system, you do not need to hack 100% of EVM’s to win an election. Just enough is fine and therefore my distrust and lack of faith in our institutions which are no longer autonomous and the public don’t seem to care for autonomy either.

Originally Posted by avishar

Since when did your mistrust in EVMs start?

The more i read and understand politics, autonomy, the irreplaceable role of autonomous institutions play in a functioning democracy, behavioural science and human psychology. I didn’t start to distrust in a day.

[ashokrajagopal]

Let us please stick to economics in this thread.

[Cessna182]

Leaving politics aside, I think that two things have become very evident in the course of this crisis:

1. The developed world is very fragile and their only hope rests on the trust that they can print whatever amounts of money they want and still be credit worthy. An example of this is the US which printed more in this year than in the last decade. I don't know how this is sustainable, except because these countries have dollar denominated debt.

We remember the talks about how European jobs come with a long vacation. Well, if the same task can be done by a communist slave without a vacation, corporations would prefer that. That's the reason for the rise of protectionism in the world today


2. The belief in developing countries that a complete first world dependence on services exports is sustainable is untenable.

China, the architect of this crisis, understood that long ago and ensured that it has a strong manufacturing base and exports to almost all countries,sometimes allowing it to dictate terms.

Personally, I have seen Chinese billboards in many parts of Africa but was surprised to see them inside the Frankfurt airport as well. They have Africa and EU in their pockets and supply everything from meat to smartphones and industrial equipment, and have bought the best EU companies to exploit the technology. In Greece also you will find Chinese billboards at many places.

They are starting to own the world, and it was all done by the citizens of these countries who buy China based brands like Xiaomi, Huawei, MG etc. I hope people in India realize how dangerous they are and stop patronizing these brands.

[vrprabhu]

Originally Posted by Samurai

..... that Y2K had nothing to do with Dot-com crash

You are right again. But, probably, I didn't make myself clear. I didn't mean to imply that dotcom crash and Y2K were inter-related.

What I was trying to imply was that by 1998 the bogey of Y2K started and in order to ensure business continuity, there was an increased demand for IT services - so as to ensure that there was no disruption. Thankfully, Armageddon didn't take place.

Post Y2K, there was an euphoria for doing business in the virtual space; the new business which sprang up - read dotcom companies - attracted huge investments and all sorts of rosy pictures were painted. Then the bust happened.

Point is, there were investments happening between 1998 and 2001 and even if the GDP rate dipped in this period, it didn't affect the economy, because the repercussions of the above was not uniformly felt.

Now, the low GDP growth is because there is a slump across ALL sectors (except Agriculture). You can lay the blame on COVID and lockdown, but as has been opined by others, the signs of slowdown were already visible earlier - it was exacerbated by the current situation. (Both demonetisation and GST attracted fair share of criticism and those opposed to these had predicted disruption of economy)

And, if the above, i.e. visibility of slowdown was seen earlier, is true, what are steps taken mitigation? Or, what do we do now? I am not sure things will turn hunky-dory soon. And, terms like 'new normal' is only increasing my already depleting tolerance

Originally Posted by V.Narayan

Can the experts opine on why the INR is appreciating against the USD? It ended today at 73.00 to a USD. The forecast for November-December is ~INR 68

Do you mean the future conversion rate for USD is at a discount to the Rupee? Usually it is vice-versa.

RBI intervention and copious foreign inflows may not be only reason - there should be something to it than more than meets the eye (In fact, RBI would be loath to allow the Rupee to appreciate unbridled - it would reduce (re-state) the foreign reserve holdings measured in INR terms; Imports are up and Exports are down as per my understanding; inward remittances by ex-pats also would be lower is my guess)

[drsingh]

Originally Posted by Sutripta

Common thought. But what is the states leverage, its bargaining chip?


Sutripta

Politics is the bargaining chip. Just like the central government had used the Covid-19 crisis to solve it's political problems and using it as a scapegoat to cover up deficient governance.

The States will use the government response to covid-19 as a scapegoat for deficient governance. And any pain on the population in the form of poor health infrastructure and reduced salaries, high state taxes , wil be blamed on the central government not sharing GST revenue.

[AZT]

Originally Posted by extreme_torque

India has first past the post electoral system, so even if the incumbents got 40 odd percentage of votes, it was still rejected by 60 percent which constitute the rest of the voters. I would not call it a majority

This conversation is a lot deeper than you think, you can literally split the votes by creating a new party just to eat into their votes. This is a pure money game and it's possible to win with even 31% of the votes - Related link on 2014 elections.

There is something called ranked choice voting where you vote for candidates in order of preference and assuming your first choice candidate isn't winning,your second preference gets counted and so on. This is what we need here with so many parties and a bunch of them kept alive solely for the purpose of splitting votes.

[Sutripta]

Originally Posted by drsingh

Politics is the bargaining chip. Just like the central government had used the Covid-19 crisis to solve it's political problems and using it as a scapegoat to cover up deficient governance.

The States will use the government response to covid-19 as a scapegoat for deficient governance. And any pain on the population in the form of poor health infrastructure and reduced salaries, high state taxes , wil be blamed on the central government not sharing GST revenue.

True. But incidental to my central question of what are the states going to do TO FORCE THE CENTRAL GOVT. to see things their way.

But I think it is a good idea to try to keep politics out of this thread. Difficult, but we can attempt!

Sutripta

[vrprabhu]

Originally Posted by ashokrajagopal

Let us please stick to economics in this thread.

Yes. PLEASE.

Originally Posted by Cessna182

1. The developed world is very fragile and their only hope rests on the trust that they can print whatever amounts of money they want and still be credit worthy.


2. The belief in developing countries that a complete first world dependence on services exports is sustainable is untenable.

China, the architect of this crisis, understood that long ago and ensured that it has a strong manufacturing base and exports to almost all countries....

I disagree with the first point - because currency requires to be backed by tangible reserves for it to have value (which has to be seen in relation with exchange rate with US Dollar) else, there will be runaway inflation - Venezuela, Greece, Brazil etc. have / are going through this...

Regarding the second - can you elaborate what you mean by 'services exports'? Complete dependence is undesirable - but what about countries like, say, Mauritius where tourism is the mainstay or Brunei which is fueled by oil and gas? Atleast, Brunei could and can thrives, whereas Venezuela with its petroleum reserves isn't able to do so?

[Cessna182]

Originally Posted by vrprabhu

Yes. PLEASE.




I disagree with the first point - because currency requires to be backed by tangible reserves for it to have value (which has to be seen in relation with exchange rate with US Dollar) else, there will be runaway inflation - Venezuela, Greece, Brazil etc. have / are going through this...

The fiat system has no physical backing other than the government trust. The gold standard was abandoned long ago and now first world countries are completely free to take on whatever debt they want to. Especially those in the west. There's no limit to this. Infinite Quantitative Easing would not have been a discussed possibility otherwise.

Originally Posted by vrprabhu

Regarding the second - can you elaborate what you mean by 'services exports'? Complete dependence is undesirable - but what about countries like, say, Mauritius where tourism is the mainstay or Brunei which is fueled by oil and gas? Atleast, Brunei could and can thrives, whereas Venezuela with its petroleum reserves isn't able to do so?

Exports of outsourcing services constitute almost 50% of the total export value for India. The markets are mainly the first world countries in the west. Manufacturing exports are miniscule.
For China, they control the supply chain for manufactured goods right from the pump used in the machine installed at the factory. They control the value chain. Even though their manufacturing exports are a small fraction of the total, they use terms like "manufacturing services" etc. to include the export of engineering services in varoius countries for infrastructure projects. And their client base is very diversified- from EU countries to African emerging markets. They control many of the high tech knowledge creation centers in the EU, and get the IP from them and translate that into products made in China. Talk to anyone involved in the semiconductor, energy and materials sectors to get an idea of their stranglehold of the IP. Because they control such strategic sectors, countries are dependent on them and cannot do much even when they extend political influence.

[SmartCat]

Originally Posted by V.Narayan

Can the experts opine on why the INR is appreciating against the USD? It ended today at 73.00 to a USD. The forecast for November-December is ~INR 68. Thanks in advance for your trouble & effort.

Rupee is strengthening and expected to further strengthen, but it does not indicate that Indian economy is expected to get stronger. INR is gaining because USD is weakening and is expected to weaken further. Strength of USD is tracked using the "Dollar Index" (tracks USD movement against major currencies like EUR, JPY, GBP etc).
https://en.wikipedia.org/wiki/U.S._Dollar_Index



USD is expected to weaken because interest rates in USA is close to zero. Dollars will flow out of USA into other countries, looking for better yields.

Originally Posted by vrprabhu

I disagree with the first point - because currency requires to be backed by tangible reserves for it to have value (which has to be seen in relation with exchange rate with US Dollar) else, there will be runaway inflation - Venezuela, Greece, Brazil etc. have / are going through this

Currency need not be backed by commodity reserves. Remember that Venezuela has the largest oil reserves in the world, and they still have hyperinflation
https://en.wikipedia.org/wiki/Oil_reserves_in_Venezuela



Meanwhile, Japan has no Gold or Copper or Oil but Yen is one of the strongest currencies in the world - and there is zero inflation there.

[vrprabhu]

Originally Posted by SmartCat

Currency need not be backed by commodity reserves. Remember that Venezuela has the largest oil reserves in the world, and they still have hyperinflation

Meanwhile, Japan has no Gold or Copper or Oil but Yen is one of the strongest currencies in the world - and there is zero inflation there.

When I said 'tangible', what I meant was that it should be backed by foreign currency reserves and gold. I didn't have commodity reserves in mind.

BTW, from what is stated by Cessna182, even this doesn't appear to be a required!

Originally Posted by Cessna182

The fiat system has no physical backing other than the government trust. The gold standard was abandoned long ago and now first world countries are completely free to take on whatever debt they want to. Especially those in the west. There's no limit to this.

This may be very stupid question - does the above imply that the currency can't be redeemed for value it represents? Even a part of it?

[Samurai]

Originally Posted by vrprabhu

I disagree with the first point - because currency requires to be backed by tangible reserves for it to have value (which has to be seen in relation with exchange rate with US Dollar) else, there will be runaway inflation - Venezuela, Greece, Brazil etc. have / are going through this...

No, Fiat currency printing needs to be backed by demand. That is enough. If the country has product and services that is in demand by other countries, they can print more currency just to keep the value stable. If the demand falls, the central bank has to take back the currency from circulation to keep the value stable. That is achieved by raising interest rates.

I had addressed how countries can print currency without having any commodity reserves or gold, back in 2011.