Thursday, July 26, 2012


The Sunday Business Line Newspaper from ''THE HINDU'', on July 1, 2012 discusses the average price of an Indian Basket of Crude Oil and compares $/barrel and INR/barrel prices.

Crude Oil imports account for just over a third of  India's imports; and thus high Crude Oil prices coupled with a weak INR have resulted in persistent inflation despite high interest rates set by the RBI.

Also, this situation has resulted in rising government Petroleum (Oil sector) subsidies as the Indian Government continues to heavily subsidize retail fuels like Diesel, Cooking Gas and Kerosene.

If the price of Crude Oil refuses to correct despite a slowing world economy, and if the Indian Rupee fails to regain lost ground vs the USD; the Indian Government will have to rethink its policy of "unsustainable" Petroleum sector subsidies and instead plan for a gradual move to market driven - prices for fuel sold by the Oil Marketing companies.

Wednesday, July 25, 2012


I guess not!

Here's an excellent cartoon by "KAL :  THE ECONOMIST : LONDON ENGLAND"

It came out around the time of the Wimbledon Tennis Tournament
It is titled....."DEUCE | Meanwhile, in the Euro Zone"

Kevin Kallaugher (KAL) is the editorial cartoonist for The Economist magazine of London.
For all those who may not have heard of him, he is the artist behind the famous BUY SELL Cartoon

Along with INGRAM PINN of the FT, he is one of the legends of the world of Financial and Political Cartoons.

Wednesday, July 18, 2012


A really worrying issue that has only started to feature in business news recently, is youth unemployment.

Below is a chart of European youth unemployment by Adam English at Inside Investing Daily.

Another Link, this time from the Telegraph:

Youth unemployment passes 50pc in Spain and Greece - Telegraph

Tuesday, July 17, 2012



"Banks have to be board-driven, government should not dictate their operations: YV Reddy, Former RBI governor"

Some edited excerpts:

There is growing criticism, both internally and overseas, about policy inertia and inept economic management by the government. What is your assessment and what, in your view, should the government do to swiftly address some of the issues on the economic front?

I cannot comment off the cuff. But I will draw back and say what IG Patel's perception of reform is. One major point he made was about the distinction between macroeconomic management and micro-sectional reforms. Macroeconomic management has, by and large, been good in India. Yet some reforms are needed. His emphasis was on sectional reforms and efficiency of the reforms.

The broader aspect is that three areas were not sufficiently addressed. One is the issue of corruption, second is confidence of civil society, and third is higher education. So, in a way, we should not think that if you keep deregulating, it is reforms.
Then there are issues in the global economy. Does that mean we should not move forward? I don't think reforms as contemplated before the crisis should be blindly carried forward. In considering reforms, efficiency should be a criterion. Macroeconomic balance is important. Macroeconomic imbalances create instability. We require growth impulse and it depends on savings and investments and productivity.

Recently, Dr Rangarajan said that even without changing the banking regulation laws, the RBI could consider issuing bank licences. Do you agree?

No, I don't agree. Purely from the global crisis situation, all over the world, they are very strict from the regulatory perspective. Even before they experienced the crisis, the Reserve Bank had requested some regulatory framework for regulating the banks, that is absolute necessary minimum.

So if the government is not able to give minimum power to the regulator, it is inappropriate to give any more licences till the law is changed and the regulator has enough regulatory (jurisdiction/freedom), more so because the type of entities that are likely to get the banking licences.

You already have Indian corporates in the mutual fund industry, they have got interconnected insurance companies, they have interconnected NBFCs, and then if you add banks, then it going to be extremely difficult for a regulator. The whole conglomerate structure - it is not only going to be a financial conglomerate, but an industrial-cum-financial-cum-banking conglomerate - becomes too big to regulate.

Monday, July 16, 2012


The Bullish Bear Blog has long since been a fan of Ruchir Sharma, and I have quoted and put up links to his articles from the Economic Times Newspaper.

This is a MUST READ BOOK for any investor and especially for those who are interested in emerging markets.

In under 300 pages, he covers a wide range of markets from Mexico, to Turkey, Indonesia and South Korea, besides the BRIC nations!

Comparing statistics like Per capita GDP, Corruption Levels, number of billionaires and Hotel Room rates across emerging markets; Ruchir Sharma does a fantastic job!

In his lucid and non technical style, he points out many aspects of Emerging markets that investors often overlook or underestimate.

Breakout Nations is by far the best book I've read this year and certainly the best book I've read on emerging markets.

Ruchir Sharma – Author of Breakout Nations Breakout Nations: In Pursuit of the Next Economic ...