Analysis of Indian news dated 18-Jul-2012
July 18, 2012
Food prices of most products is rising faster than last year. For some food products, the rise is rising but at lesser speed than last year.
The main reason for inflation is currency printing by Indian government. The money supply is now increasing at the rate of 20% per year.
What is GDP?
GDP = private consumption + investment + government spending + (exports – imports)
A higher GDP does not necessarily mean a better nation e.g. If I take a stone and break my neighbors window glass; my neighbor will have to purchase a new window pane; the glass seller will gain revenue; the GDP will rise. But, is there any benefit to the nation? Is the nation better off if we dig a ditch, pay laborers and then fill the ditch again?
GDP is an incorrect way to measure growth. Politicians like this because they can show GDP growing, when nation spends more than it earns; the nation is acutally worse off, but GDP shows a rosy picture.
The real wealth of a nation is its production capacity i.e. how much steel, cars, aero planes, cement, etc it produces per year. Only if the nation has a trade surplus, a budget surplus and money supply is almost stable; then the economy is healthy.
In India, we have a trade deficit, budget deficit and M3 money supply increasing at the rate of 20% per year. The economy is in a bad shape, but politicians and MSM talk about GDP to distract us and paint a rosier picture.
UP suffers from poverty, unemployment and lack of infrastructure. UP chief minister wants the extravagant “London Eye” so that he gets a birds eye view of the city. A feasibility study is being conducted by IIT-Roorkee. Even if it is feasible, is this the best use of tax payer’s money?
On an average, 79 tiny units declare sick every day in India. The main reason is Government rules and regulations are so many that tiny units cannot comply. Big industries can employ additional people to comply with these rules and regulations. So tiny units are going bankrupt.
Power distribution companies have a debt of Rs 2 lakh crore. They are asking for a tax-payer bailout from government. Before we bailout these companies, let us ask, what is the guarantee that they will recover permanently even after the bailout? Will they again ask for another bailout after a few years? I say, privatize power. This will stop most ills.
Mumbai realty sales are falling. Home owners feel that flats are over priced.
The prices of real estate is not falling because the government is providing loans at cheap rates for real estate and keep restructuring the debt of real estate companies.
FDI inflows in India is poor.
The main reasons are that government policies are not consistent (retrospective taxation), too many taxes, to much bureaucracy that limits growth, trade deficit that causes Indian rupee to keep falling and budget deficit that causes high inflation. FII believe that India is one of the worst places to invest in emerging markets.
Global bank HSBC is accused of money laundering for drug lords.
MSM is trying to sweep under the carpet the biggest banking scandal – LIBOR rate. The fraud impacted more than $500 Trillion loans/derivatives. The whole banking system is threatened by it. So either the banking system will collapse or governments will have to pass laws to limit damages passing the losses to tax payers.
FED, a cartel of private banks, can create Trillions of dollars out of thin air. Effectively, the owners of these private banks (Rothschild, Rockefeller, et al) control USA and World (since US $ is the reserve currency of the world).
Asking Bernanke, “Will do do QE?”; is like asking a drug addict, “Will you take drugs?” Of course, the drug addict will take drugs; it is just a question of “When”. Of course, Bernanke will print currency; it is just a question of “When”.
Buy physical gold and silver to protect yourself. If you cannot touch it, you don’t own it. Exit all paper investments including ETFs, stocks, PF, PPF, NSC, etc.
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