[dragracer567]

Came across these interesting graphs on Twitter. I really do wonder what implications these numbers have on the ground!

[V.Narayan]

Originally Posted by dragracer567

Came across these interesting graphs on Twitter. I really do wonder what implications these numbers have on the ground!

Thank you @dragracer567. I have been searching for exactly this chart {the top one} for a while. And here you share this most interesting chart.

All,

As the data is from the World Bank I suspect we can treat it as reasonably correct. I would adjust this for the ‘one-sixth’ factor i.e. presume the gauge R&R is off by a sixth. So when the data indicates there are 600 million below $3.85 a day then the real life number could be 700 million. To keep the discussion simple $3.85 very very roughly translates to the average minimum wage stipulated in India. Minimum wage being a State subject varies significantly by State but $3.85 is somewhere in the lower middle of that range.

So, in 1977 ~600 millions of our then 750 million population was below this level i.e. ~80%. Today {as per my adjusted number above} ~700 million are still below this level or ~50% of the population. Mind you for that hapless 700 million it is no succor that progress has been made but nevertheless other than China no other nation in world history has moved so many along the poverty needle. A point that should be kept in mind when we make apples to oranges comparisons with Singapore or Australia etc. This fact that may still be lost on detractors from the ‘but India sucks’ brigade in our society of drawing room generals and I wouldn’t waste my time arguing with them.

In my work in rural healthcare, the abject all pervasive poverty, that was so common in 1977, I get to only see in a handful of States – Central & Eastern UP, Vidharba region in Eastern Maharashtra, Bihar, Jharkhand, Chhattisgarh, Uttrakhand, West Bengal, and Odisha. Of course we have a very long journey ahead – 700 million more to go but let us pause for a moment and reflect on what we have achieved. My only regret is we could have done more.

The one disagreement IMHO with this data is that they are defining absolute poverty as below $1.00 a day. That is the sort of theoretical number economists love to debate and come up with while attending seminars with a sumptuous lunch spread. To say we have only 15 million in poverty sounds rich to anyone who works in the hinterland. It is simply not true. Using this very data I'd take the $ 2.15 and less per day as the real practical below poverty number which seems to be circa 175 million. That seems to tally with at least my lay observations 15 days a month.

The one difference I observe between 1977 and today is in aspirations of the young in that bottom half. Thanks to improving hope of a better life and the internet the 20-year old today from say rural Jharkhand rightfully has aspirations to move ahead in life and not merely survive. This overwhelming force of social change more than any other single factor will compel change in our political discourse over the coming 20 years. Politicians of all colours can ignore it only at their peril.

Jai Hind.

PS: Request we keep the debate & disagreements healthy and keep politics out of it.

[Samurai]

Originally Posted by V.Narayan

The one difference I observe between 1977 and today is in aspirations of the young in that bottom half. Thanks to improving hope of a better life and the internet the 20-year old today from say rural Jharkhand rightfully has aspirations to move ahead in life and not merely survive. This overwhelming force of social change more than any other single factor will compel change in our political discourse over the coming 20 years.

Totally... In the Pakistani video I posted few days ago, the visitor from Pakistan said that same thing about how people felt in the remote village in Gujarat. People have hope and are looking forward to better future.

I don't recall having that kind of hope in my teens in the 80s. I frankly didn't expect to do better than my parents (who never owned a car), and I didn't expect to own a car, let alone before turning 25, like I did. I didn't even dream of going abroad. I merely hoped for a steady job until I retired with a pension. That was the height of my ambition, and I was concerned if I would achieve it. However, India changed so much since the 90s, I ended up doing things I never dreamed of doing.

[am1m]

Originally Posted by Samurai

...about how people felt in the remote village in Gujarat. People have hope and are looking forward to better future.

Not just in villages. Growing up in Bangalore in the 90s, studying in a pretty good school and even after getting in to a good college, there was a lot of uncertainty about getting a job. Most of us were told the best chance we had to make something of ourselves was to write SAT/GRE and go to the US. Or crack IIT-JEE. The IT services industry boom in Bangalore at the time just changed a lot of things for a section of my generation, even in cities.

[Lobogris]

Originally Posted by V.Narayan

So when the data indicates there are 600 million below $3.85 a day then the real life number could be 700 million. To keep the discussion simple $3.85 very very roughly translates to the average minimum wage. [/i]

There is no doubt a lot of progress has been made. Looking back is educational but looking ahead is vital. We can’t take solace by comparing with 1960 or 1970 as India was the known poster child for poverty in the world at that time. Today our target should be to get close to Europe and at the very least to other developing countries like Mexico, Brazil, Thailand and Malaysia. With 700 billion people surviving on a monthly income of just around 10 to 15k per month, we remain abjectly poor. We need to urgently and quickly lift these people to the level of at least 30 to 50k per month to be able to have some semblance of development. Our per capita GDP levels at $2300 are way below Mexico, Brazil and Malaysia which are all above $10k and even below Sri Lanka and Bangladesh and several African countries.
Unfortunately the Indian governments and people have always been more worried about religion, caste etc than focusing on economic progress. Currently we are suffering from a new jingoism where a lot of ignorant people actually believe India has developed even more than the US and Europe without having any clue about the reality. I desperately and fervently hope that we can get to at least the current levels of China in the next 20 years.

[RaghavEvoX]

Originally Posted by V.Narayan

I have been searching for exactly this chart {the top one} for a while. And here you share this most interesting chart.

All,

As the data is from the World Bank I suspect we can treat it as reasonably correct. I would adjust this for the ‘one-sixth’ factor i.e. presume the gauge R&R is off by a sixth. So when the data indicates there are 600 million below $3.85 a day then the real life number could be 700 million. To keep the discussion simple $3.85 very very roughly translates to the average minimum wage stipulated in India. Minimum wage being a State subject varies significantly by State but $3.85 is somewhere in the lower middle of that range.

You can get more data on similar lines in https://data.worldbank.org/ .
Lot of time & effort goes in publishing this Public data with maximum accuracy and hope this will help in better understanding.

[varunswnt]

Originally Posted by Zinger_Winger

The contagion effect is inevitable. UBS being forced to take over CS's rotten derivative exposures is honestly much more than UBS can chew on.
A few more rate hikes would bring all the rot out in the open.
With UBS now being forced in, it's going to be a 10,000 mega-tone fallout, compared to a 100 mega-tone impact that only CS going down would've had globally.

With Credit Suisse now UBS too will be under lot of stress in such volatile market conditions. UBS would have preferred to stay away from this deal but could not owing to intervention by Government and Central Bank. I hope this does not turn out even more bad than independent Credit Suisse's outcome.

Reuters - Relief over Credit Suisse deal crumbles as focus shifts to bond risks

Under the deal, the Swiss regulator decided that Credit Suisse additional tier-1 bonds - or AT1 bonds - with a notional value of $17 billion will be valued at zero, angering some of the holders of the debt who thought they would be better protected than shareholders in the takeover deal announced on Sunday.

[jaaz]

I doubt about the Twitter graph, where it shows only 15 million are in extreme poverty. Just last year Indian govt. declared that more than 800 million are below poverty line and started giving them freebies. The variance can be 5 to 10%, and not more than that. Now, extreme poverty cannot happen in India due to the compassionate Indian population. They support each other in times of distress.

Secondly many are comparing Adani case with Bank collapse in US and Europe, which is not correct. Fraud is different and misjudging macro economics is different. We'll be happy if Adani sues Hindenberg, but seems nothing happening as such.

We, Indians will be more happy to see who's black money is being routed through Mauritius.

[SmartCat]

Hindenburg has come out with a report targeting Jack Dorsey (of Twitter fame)'s Block/Square company. It is a $50 billion NASDAQ listed company that offers payment solutions (a bit like PayTM)
https://hindenburgresearch.com/block/

Core argument is that Block knowingly facilitates payments for criminal activity and has not done anything to address it. Criminals can easily open another account, if one account is blocked for fraud. Their 'Cash App' is so infamous for sending/receiving payments for crimes that hip hop artistes mention it in their songs

https://www.youtube.com/watch?v=StjWk3Mj-M4

Block shares plunge 20% after short-seller Hindenburg says Jack Dorsey’s company facilitates fraud
https://www.cnbc.com/2023/03/23/bloc...k-dorseys.html

[V.Narayan]

A first class video on the likelihood, causes and route to de-dollarization some of us believe is coming. It is an hour long but worth the watch.

https://www.youtube.com/watch?v=FzI0oyxQ218

Till the 1950s and the early 1960s the GBP continued to play an important role as junior partner to the US$ as a medium of world trade and store of national wealth by central banks. After the devaluation of the Pound in ~1966 and the $ going off the limited gold standard in 1971 the US$ the US$ was in search for a foothold to retain its primacy. This as we know came with Henry Kissinger’s master stroke of creating the petro-dollar by convincing Saudi Arabia, and thus OPEC, that all oil trade will be denominated and paid for in US$. Even their arch cold war enemy USSR jumped onto the bandwagon and the US was happy for it. This created a permanent and massive demand for the US$ by countries all over the globe and created a supply of US$ outside USA that way exceeded the supply of dollars within the US. And when your currency backed only by promises to pay is sought by the world over it leads to the temptation to print as much as you need and a lot of what you don’t need too. And that is the trap the US today has cheerfully walked into driven by endless wars and 700 military stations of all kinds the world over. $31 trillion is the cash debt owed. That is more than the economies of China, Japan, Germany, India combined.

This debt was barely sustainable due to the US$ being the primary store of wealth and the preferred instrument of trade exchange. The US$ is America’s most potent weapon by far. Much much more than its nuclear arsenal or aircraft carriers. Even through the fragile days of the cold war they did not mess with the $ against the USSR.

But stupidly, IMHO, Joe Biden weaponized it in February 2022, following the Ukraine war and provided the stimulus several nations were waiting for to unshackle at least a part of their trade/store of wealth away from the US$. China purchases oil from Iran in return for Yuan denominated gold bonds that can be traded on the Shanghai Gold Exchange or converted to real metal; India and Russia have started at least a part rouble trade; Saudia and China, Saudia & India, India & UAE, UAE & China are all now trading oil at least partly in Yuan, Dirhams, Rupee and other non-$ currencies. There are at least a dozen such pairs now.

Compared to the use of the $ in world trade all this is still minor but IMHO is the thin edge of the wedge that will now move in only one direction and at an increasingly rapid pace. By weaponizing the $ and associated settlements system America said to all of us, if I don’t like what you do I’ll create an existential threat for you. This is just the sort of all singing all dancing threat weakening powers indulge in.

Maybe in the 2030s some form of digital currency backed by real metal and commodities and not mere promissory notes and maintained by a verifiable block chain based ledger will emerge and at least partly replace the $. Can’t see the Remimbi doing that – lacks trust by the spadeful.

Right now the US of A is like the richest land lord in the village who daily borrows from every farmer, artisan and serf in that village to feed his inability to earn as much as he spends. When its ability to borrow freely {read print notes at will} diminishes that pile of debt will come calling with economic ramifications for the globe.

I am not at all advocating upending the SWIFT or the $ denominated world trade and replacing it by another. I'm just stating that the forces of geo-politics will ensure that one or two parallel systems will come up also and all 2 or 3 will co-exist together. It will be good for world commerce not to be dominated by one currency no matter which. The Chinese can get it done. Most banks will become members of both. The cry for an alternative to SWIFT and the US$ has surfaced time and again {whenever there is a crises} since the end of the cold war. By weaponizing what is meant to be a neutral multi-lateral instrument of trade into a weapon of war and political muscle USA has set in motion the dominoes for alternatives and for the eventual demise of its own currency printing press. The next decade promises to be eventful on this front.

[SnS_12]

Originally Posted by V.Narayan

A first class video on the likelihood, causes and route to de-dollarization some of us believe is coming.

Russia’s move to invade Ukraine and the subsequent sanctions that they accepted would come could well be a part of their move to start off the de-dollarization as we discussed on the Ukraine war thread. US, is especially spooked post the developments after Xi’s meeting with Putin in Russia and this is slowly getting coverage in mainstream media and this could very well lead to US pushing NATO (Europe) to go to war with Russia. Because if the $ looses its supremacy as the reserve currency all these $ in circulation will eventually return back to US and it will only lead to more inflation in US, which they have been pushing on the world with their printing of trillions of $ during covid.

The dollar is our superpower, and Russia and China are threatening it.

The most interesting outcome of the three-day summit between Vladimir Putin and Xi Jinping got limited media attention. Describing their talks, Putin said, “We are in favor of using the Chinese yuan for settlements between Russia and the countries of Asia, Africa and Latin America.” So the world’s second-largest economy and its largest energy exporter are actively trying to dent the dollar’s dominance as the anchor of the international financial system. Will they succeed?

https://www.washingtonpost.com/opini...-russia-china/

Russia has adopted the renminbi as one of the main currencies for its international reserves, overseas trade and even some personal banking services as it pivots towards China in the face of western sanctions.

The shift has made Russia a rare example of a country adopting the renminbi rather than the US dollar or euro as a reserve currency, but poses risks for Moscow given Beijing’s history of abrupt currency devaluations.

https://www.ft.com/content/65681143-...d-a7ca6171937a

[V.Narayan]

Thank you SnS_12 for sharing these news articles.My take below.

Originally Posted by SnS_12

Russia’s move to invade Ukraine and the subsequent sanctions that they accepted would come could well be a part of their move to start off the de-dollarization as we discussed on the Ukraine war thread.

Russia did not have de-dollarization on its mind when it started the Ukraine war. I don't think they thought through the extent of sanctions either. Given that Putin barely gave a few days notice to his general is indicative of the planning that preceded this war. We may be nostalgic about the USSR and our old friendship but may want to stay away from mistaking today's Russia with the old USSR and its commitment to India. Having dealt with the Russians in business I cannot over emphasize how different they are today.

Originally Posted by SnS_12

and this could very well lead to US pushing NATO (Europe) to go to war with Russia.

US can be headstrong and stupid but Europe is more thoughtful. Plus it is their backside on the line. I doubt there will be a full war. The proxy war will simmer, maybe for years.

Originally Posted by SnS_12

Because if the $ looses its supremacy as the reserve currency all these $ in circulation will eventually return back to US and it will only lead to more inflation in US, which they have been pushing on the world with their printing of trillions of $ during covid.

Here we agree. But the death will not be swift {pun notwithstanding} but by a thousand cuts over many years - maybe 15 or 20.

[SnS_12]

Originally Posted by V.Narayan

US can be headstrong and stupid but Europe is more thoughtful. Plus it is their backside on the line. I doubt there will be a full war. The proxy war will simmer, maybe for years.

US along with NATO has been pocking Russia to make a silly mistake which can lead to military conflict between the two sides directly. But Russia has been wise to avoid it till now as today’s war on the economic front can be more lethal.

But news like below make you think what the West is actually trying to do?

The British defense ministry on Monday confirmed it would provide Ukraine with armor-piercing rounds containing depleted uranium. Such rounds were developed by the U.S. during the Cold War to destroy Soviet tanks, including the same T-72 tanks that Ukraine now faces in its push to break through a stalemate in the east.

NATO considering deployment of up to 300,000 troops on border with Russia

[warrioraks]

There is some news on Deutsche Bank being under stress. It's a flurry of bad news on economic front one after another. Authoritative sources are saying all is well with Deutsche, and it might indeed by the case. But I think the game is over for a lot of companies which have high debt and liabiliites. Over next 1-2 years, we will see a depressing economic turmoil where highly leveraged institutions will go bust and we will get a very very hard landing.

If memory serves me right, we were at a similar cross-roads around 2018 but then Covid happened and we saw trillions getting pumped into the economy which helped in the short term. But now with historically high inflation in most countries, only a miracle can save the day. That miracle could very well be a new world economic order.

[V.Narayan]

Brazil & China ink deal to settle trade in Renminbi and Real
https://theloadstar.com/b-china-braz...lar-for-trade/

Iran making Renminbi a significant medium of trade settlement
https://www.silkroadbriefing.com/new...ational-trade/

Two news items of the week that caught my eye. You don’t always find these in mainline Western media at times. Of the BRICS – four have started some trade settlement between themselves in non-$ currencies, usually there own and each is putting in place or has already put in place a system for electronic settlements between the banks of the two nations. To this fray are being added some African nations that desire the flexibility to import from India and China in INR or RMB respectively. And then there is Saudia-China, India-UAE, Iran-Russia etc This is a long and significant list considering that the $ was weaponized by Joe Biden only 13 months ago. China and India are quietly purchasing gold & silver bullion and taking deliveries into their own jurisdictions i.e. not leaving it in trust with the New York Reserve. As a reserve currency the US$ still has no alternative even by a country mile. But if more and more oil trade gets done in non-$ currencies I would place my bets on some $ depreciation correction this year. 79 to the $, anyone?

$ trade demand going down, US economy at full employment, Europe in doldrums, China getting aggressive, US interest rates at a high, US printing more notes, talk of a global recession – its all a rather confusing picture of conflicting signs. An interesting and risky year lies ahead.

This trend towards partial de-dollarization of trade in some ways was inevitable as the size of the US economy versus the global collective GDP shrinks. The anti-US lobby should not start to assume the end of the $ is nigh or even desirable. What could replace it could be a lot worse. But yes some dilution of US hegemony is good for world trade & the risk the US debt pile means for the globe.

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As an aside in currency matters things go slowly for a long time and then all of a sudden. Not so long ago there was something called the sterling area in which member economies traded in the GBP rather than the USD. When I was a child my first atlas was an Oxford School Atlas of 1957 {one of those hand me downs so common then} which actually had a map of the globe marking out the sterling area countries! Today most have never heard of it. It went into a slow decline from 1947/1948 and then quietly collapsed altogether in 1967. The unexpected happens.