[vrprabhu]

Originally Posted by SmartCat

... You probably got misled because published Govt bond rates are of 10 yr duration, while FD duration is usually 1 to 5 yr.

I am looking it from the point of view of money market instruments - typically gilts with maturity less than one year maturity (T.Bills) will be cheaper compared to Bank FDs, because these are not really avenues of 'investment' but deployment of 'surplus liquidity'. However, if you compare G.Sec yields over a 3 to 5 year maturity / horizon, you'll find that their rates are higher than bank FD rates.

Take a look at this -





And this is the interest rate of a large private sector bank and public sector bank -





Does it makes sense to put money in fixed deposit at these rates? Amongst the lowest rates in the last two decades, if I am not mistaken. Paradox here is that both banks are offering LOWER interest for higher quantum of deposits - flush with money and don't want further liquidity?

I agree with your other observations, though. I know that people in higher echelons have more insight into the machinations of the economy, but now I think they do not have connect with the reality - the 'powerhouse' of the economy were those who were spending, even if it meant borrowing at a high cost, may no longer be able to do so, given the uncertainties prevailing.

Originally Posted by Chetan_Rao

...If your bank doubles your credit card spending limit, that doesn't mean your actual spending capacity is doubled. The bill still comes due end of the month, and it's horrendously expensive to shift repayment to the future...

Invaluable words of wisdom

[SmartCat]

Originally Posted by vrprabhu

And this is the interest rate of a large private sector bank (HDFC Bank) and public sector bank (Bank of Maharashtra) - Does it makes sense to put money in fixed deposit at these rates?

HDFC Bank FD rates are comparable to that of SBI. But Bank of Maharashtra offering lower FD rates than SBI/HDFC Bank implies they simply don't want your money. However, this might be because RBI had put lending restrictions on sick PSU banks like BoM.

Paradox here is that both banks are offering LOWER interest for higher quantum of deposits - flush with money and don't want further liquidity?

Yes. And this means there is not enough demand for credit, and they want to discourage big ticket deposits.

[sunilch]

Originally Posted by vrprabhu

Take a look at this -

Attachment 2142638

Attachment 2142635

The Yield Curve that you have shared here is an Ideal Yield Curve, the most desirable for any economy by the market participants. Sadly though I do not see this ideal scenario leading to any real Job growth in India for the last 3-4 years. For many reasons, most of our industries are not operating at optimum capacity and hence there hasn't been any investment in growth for future and we are simply maintaining status quo.

[vrprabhu]

Originally Posted by SmartCat

... might be because RBI had put lending restrictions on sick PSU banks like BoM.

Hmmm.... BoM is no longer a 'sick PSU Bank' - in fact, it has come out of PCA quite some time back and is one of the better performing PSBs today; rumors are that it could be one of the candidates for privatisation.

Originally Posted by sunilch

The Yield Curve that you have shared here is an Ideal Yield Curve

I don't get what you mean by 'ideal yield curve' - the graph actually depicts the yield curve based on the rates offered by the market for currently traded instruments of various maturities.

A forward looking YTM curve - may be available, but unlikely to vary significantly, from the current markets trends given the prevailing situation.

Anyway, GoI and RBI seem to be aiming for further lowering of interest rates on government securities, and may result in reduction of interest rates by banks - deposits as well as advances (the recent rate cuts on small saving instruments, since withdrawn, is an indication?)

[VKumar]

Gentlemen,

A few questions for the experts, pertaining to the current COVID situation.

We have left the practice of deficit financing by printing more money decades back. But isn't this the time when we shall go back to the same practice, to help increase the consumer expenditure?

Helicopter drop / Helicopter hoover, as recently suggested by a member of Kerala Assembly; 5% of GDP value to be done away as a helicopter drop.

Our healthcare sector needs a massive reform, it is proven at this point of time. But for that the government also needs to make massive investments, hence we need higher revenue receipts. So, isn't it the high time that the governing bodies shall go to some disruptive age old practices to deliver a massive policy stimulus?

I am not very much aware of how the economy is run or maintained, hence seeking the opinion of experts over this topic.

[Turbanator]

Originally Posted by VKumar

by printing more money decades back. But isn't this the time when we shall go back to the same practice.

Not an expert, but it's not so easy, our currency is not something that can withstand such adventure. We can end up with a super depreciated Rupee and inflation never seen before

[Samurai]

We all know people who lose their lunch when they hear the word socialism or just the name Bernie Sanders. That is mainly because people get triggered by the label, without really understanding what the word means in today's context. Instead they start thinking about communism. Which is actually antithetical these days, considering communist China itself is following capitalism and has more billionaires than any other democratic country. So communism has lost all connection with socialism. There is no point in pondering what Karl Marx thought in 19th century. He is irrelevant now.

What is the socialism that is defined by Bernie Sanders? We don't have to guess, he defined that in 2006 in an interview.

AMY GOODMAN: And if people ask, “What do you mean, 'socialist'?” what would you say?

REP. BERNIE SANDERS: Well, I think it means the government has got to play a very important role in making sure that as a right of citizenship, all of our people have healthcare; that as a right, all of our kids, regardless of income, have quality childcare, are able to go to college without going deeply into debt; that it means we do not allow large corporations and moneyed interests to destroy our environment; that we create a government in which it is not dominated by big money interest. I mean, to me, it means democracy, frankly. That’s all it means. And we are living in an increasingly undemocratic society in which decisions are made by people who have huge sums of money. And that’s the goal that we have to achieve.

Source

[Jeroen]

Well, I think it means the government has got to play a very important role in making sure that as a right of citizenship, all of our people have healthcare; that as a right, all of our kids, regardless of income, have quality childcare, are able to go to college without going deeply into debt; that it means we do not allow large corporations and moneyed interests to destroy our environment; that we create a government in which it is not dominated by big money interest. I mean, to me, it means democracy, frankly.

Sadly, The republicans call this radical, wrong and dangerous.

Jeroen

[v1p3r]

Originally Posted by Jeroen

Sadly, The republicans call this radical, wrong and dangerous.

Well, fifty years ago Americans also believed that black people were inferior. There's no accounting for belief.

Healthcare, school and college education, housing, food, and a basic and acceptable quality of life should be available at no cost to everyone, period. The world should 'hold these truths to be self evident'.

[m8002?]

The cold war period just equated these concepts : Democrazy = Capitalisam and Communism = Socialism while the reality is different.

Now, its difficult for many people to understand that a Democratic country can be socialist ( many European countries ? ) and Capitalism can thrive under Communists ( China? ).

[kiku007]

Originally Posted by kiku007

So the stock market represents the state/outlook of a select group of companies and the GDP apparently only represents the formal economy which arguably represents only a small portion of the Indian economy (because the informal economy is argued to be much larger).

How to measure the economic health of a huge nation like India with reasonable confidence?

I was in search of answers to some of my questions on the stock market and I started reading, "The Intelligent Investor" by Benjamin Graham.

https://www.goodreads.com/book/show/...igent_Investor

It is a good book and I was quite enlightened and corrected my understanding on the Stock market swings and the economy. TL;DR version is, looking at the stock market swings to gauge the economic health may not be the right metric at all. It's just fodder for the media.

“A stock is not just a ticker symbol or an electronic blip; it is an ownership interest in an actual business, with an underlying value that does not depend on its share price.”
― Benjamin Graham, The Intelligent Investor


“The market is a pendulum that forever swings between unsustainable optimism (which makes stocks too expensive) and unjustified pessimism (which makes them too cheap). The Intelligent Investor is a realist who sells to optimists and buys from pessimists.”
― Jason Zweig, The Intelligent Investor

[SmartCat]

Originally Posted by kiku007

I was in search of some questions on the stock market and I started reading, "The Intelligent Investor" by Benjamin Graham.

The Intelligent Investor is the 'Bible' of stock market investing. And Benjamin Graham was the Guru (literally) of Warren Buffet.

[sunilch]

Not directly related to Economics but related to 'Economy' and 'Governance'. A bit fun to watch but worth the watch. We need a showman like him in India. Last thing we need is a flimstar trying to become a head of state.

https://www.youtube.com/watch?v=v7ODeW4qaDg

[dragracer567]

Coming back to the Indian economy in terms of GDP per capita, I had a rude shock today morning triggered by this article (source). Basically when Kenya supplied aid to India, there was rude (and almost racist) backlash on social media of our predicament for taking aid from an apparently 'impoverished' country.

A lot of these esteemed "commentators" should brace themselves for an awakening because as of 2020, the Kenyan GDP per capita was higher than that of India. The Indian economy is supposed to pull ahead in 2021 by an insignificant $62 according to the IMF but that's not going to happen with the second wave and a prospective third wave with low vaccination numbers diminishing India's growth rate prospects for 2021 as well. Not just Kenya, about 20 African countries are ahead of India in terms of GDP per capita including Sub-Saharan African countries like Ghana, Cote d'Ivoire, Nigeria, Republic of Congo and Kenya. Infact, I was in for a ruder awakening when I realized that if Bihar was a nation, it would rank 184 out of 195 while UP would rank 172. These are appalling numbers to say the least!

Yes, we do have a rich history, a more diversified economy, stronger institutions, more international clout and arguably a more democratic system. Most importantly, India has a higher HDI than many of these countries, about 12 African countries have a higher HDI than India. But given our growth rates since 2017, none of these are guaranteed to keep us ahead.

So, what exactly am I getting at? Well, we were in for a rude shock when we realized that Bangladesh is growing faster than us and has actually exceeded our GDP per capita (though a lot of caveats exist on this data) and now the same is the case for many Sub-Saharan African countries. So, if any of us are tempted to demean any nation based on their perceived state of development, perhaps these data would convince you otherwise.

[hondafanboy]

I don't understand the need to do such comparisons. But then if not this then what will they write about ? I wonder if there was such comparisons or writings done on development / economy /aid etc. w.r.t to African countries etc.

It is quite evident and obvious that our development and economy has derailed massively after Covid struck. And we all are responsible for it, including the state and central government.

But when it gets over ( and it will ), development and economy will again be back on the track , might be slow to start , but will pick up the speed as we move forward.