Tag Archive: World

Stop Oil Price Rise by Banning Trading

While it looks like the oil prices may not hit the $100 mark after all, I did read a rather bizarre article on the New York Times on a proposed Indian solution to help contain the rising oil prices.

M.S. Srinivasan, who is India’s Petroleum Secretary, is as worried as anyone else about the rising oil prices, despite steady demand and steady supply (we’ll ignore the temporary jumps due to oil rigs being closed in some parts of the world due to unfriendly weather in the seas).

His solution?

Why, taking the crude oil off the commodity exchanges, of course. The way he sees it, the speculators are driving up the prices of oil, fueled (pardon the pun) by investors from hedge funds, banks and other financial institutions that have poured a lot of capital into the oil market.

Not that it’s a bad idea, per se, but it does sound a lot like an Indian idea — when something does not work, regulate it until it does.

The Foolishness of the Indian Finance Ministry

In its time, the Indian finance ministry has done a lot of good things. Agreed, most of them were fortunate mistakes (sorry, too much Taleb on my brain), but they still did a reasonable job of opening up the economy, especially after the 1991 economic crisis.

In fact, you would think that with the current Prime Minister being a former RBI Governor and being the former Finance Minister with a PhD from Oxford, and with the current Finance Minister being a Harvard educated economist/lawyer, India’s economic and fiscal policies would be a little more sound.

Currently, the US economy is in a downturn. To top it off, the federal rate cut has created liquidity in the market that’s been driving the FIIs to invest some place. So, all the FIIs have taken to investing a lot in India. This is further helped by the fact that a lot of capital account control measures are being relaxed to help these chaps. While the RBI did make a good call on trying to control the rise of the Rupee against the US Dollar, it does not seem to be enough.

If anything, FII investment has shot up to an all-time high of USD 11 bn this year. Wow. Yay. Way to go. Kudos. Etc etc.

Now, India also happens to be one of the worst borrowers from the World Bank. In fact, India moved into the list of the top 10 borrowers at World Bank sometime back. Well, it is a developing nation and there are some problems (you know, corrupt politicians, poverty, disease, politicians whose kids probably really need that luxury car etc). Well, that’s fair enough and understandable, too.

But do they really need to be stupid enough to try and pay off these debts using money that the FIIs have invested in the economy? Just what do they think is going to happen the moment the US economy recovers? That’s right, they are just going to go back to investing in the US.

One of the things that hit the SE Asian economic crisis of the late 90s was the absolute lack of capital control that these countries demonstrated, that led to their economies crashing. India was fortunate enough to have a fairly strict and tightly controlled (oh, sorry, regulated) market economy then.

Today, the story is slightly different. What would happen when the FIIs pull back and all the money that’s in the economy goes out of it? While I wouldn’t go as far as some people to say that the economy is at a financial risk, it is still a scary thought.

At least in the case of China, they have tangible assets (i.e. manufacturing industries). India has a very weak manufacturing infrastructure and very little in the name of tangible assets. Unless we create new assets, the continued rise will shoot the price of existing assets through the roof. Secondly, in the event of a market crash, there would have been some tangible benefit derived out of the investments that would go back into the system, e.g. infrastructure and industries.

It is indeed a policy dilemma for India. I do not know what the solution is — but what I do know is that we’d better find a good way of absorbing all this investment into the system. Otherwise, when the investors pull out and the stock market starts going down (and oh yes it will, at some point or the other), it could leave the Indian economy in a bad shape.

(Today’s pessimistic armchair economic forecast inspired by Blues from around the world and an over-dose of RSS feeds.)

Hindu Prayer Shouted Down in US Senate

Chaplains from various faiths and religions are sometimes invited to provide the opening prayer for the US Senate. While traditionally this has been done by a Christian Chaplain, this Thursday was unique in that it was the first time a Hindu Chaplain was invited to say the opening prayer in front of the US Senate. Unfortunately, this was marked by protests by some religious Christian folks who shouted down the prayer and kept interrupting it periodically. A video of the incident can also be viewed.

And as a side note, it is interesting how the right seems to want more religion, but only if it were their own. It is rather unfortunate that for a religion that is supposed to teach tolerance, its most fervent followers seem to be showing very little of it.

Toon Irony

Cartoon irony

A Response to President APJ Abdul Kalam

The President of India, Dr. APJ Abdul Kalam, had posted a question on Yahoo! Answers — What should we do to free our planet from terrorism?

Human society, from origin until now, has always been at war within and between groups and has led to two World Wars. Presently, terrorism and low intensity warfare are affecting many parts if the world.

As the current global population of 6 billion increases to 8 billion by 2025, national and international conflicts will continue to be a source of concern for humanity. When evil minds combine, good minds have to work together and combat. In this context, what are the out-of-the-box solutions to free the planet earth from terrorism?

Your answers when processed and implemented can lead to a peaceful, happy and safe planet earth.

And of course, like over 6,000 15,000 other people, I just felt that I had to pitch in too.

Of Wines and Beards

Turns out that certain Muslim cab drivers at some airports are refusing to give you a ride if you carry alchohol in your baggage.

Eva Buzek is a flight attendant who came back home from a trip to France. At the airport, she hailed a cab and asked the driver to handle her bag with care because it had some wine. The cab driver not only refused to take her, he also told other Muslim drivers that she carried alchohol, making them refuse her a ride, as well.

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