China’s strategy of economic colonisation of its regional neighbours has just been laid bare
… A restaurant owner is visited by representatives of a certain organisation that wishes to invest in his business. This is an offer he cannot refuse. Soon the “investors” are there every day, walking out sides of meat and crates of wine and liquor through the back door while the owner frets and worries about his vanishing profits. Eventually, when there is nothing left to take, the investors burn down the premises for the insurance money. Hence the old joke: “Sorry to hear about the fire, Lenny.” “Shh! Tomorrow.”
Well, it appears a “restaurant” that we might call “The Taste of Lahore”, or something similar, perhaps “The Karachi Grill” or “Memories of Rawalpindi”, has just been invested in by a certain powerful organisation. Let’s see whether anything is being walked out the back door, and whether there are any suspicious jerry cans of gasoline stacked in the alley out back.
If you didn’t laugh at their cognitive dissonance … you’d laugh anyway
Cognitive dissonance is the gap between reality and what you would prefer reality to be. That gap gets filled with error and blindness when you can’t face up to what’s actually happening in the world. It’s thinking wishfully, with an edge of psychotic unreason. The Trump hysteria among Clinton Democrats and others in the USA (what Scott Adams calls “Trump Derangement Syndrome”) derives from an unwillingness to accept that their candidate was poisonously unpopular, lost the election, and that this is really for real.
The Leftish Naked Capitalism website, usually excellent on many matters, has been simply appalling in its coverage of India under Modi, and this I also put down to cognitive dissonance. It uncritically prints articles by notorious Congress Party frontmen inaccurate in details and wholly ideological in content.
A few days ago, despite the best efforts of the London Underground system, I had a very interesting meeting with one of the most successful British-Indian businessmen of our time, whose identity I shall withhold. He arrived in the UK several decades ago without any capital, and indeed without even much of the English language. He has succeeded in becoming one of the country’s foremost entrepreneurs, with a personal worth in the hundreds of millions of pounds – although he wears it lightly and is open and friendly in person, without any airs or grandiosity. It’s a fact that he is legendary in his sector for being a considerate and kindly employer, and his staff turnover rate is legendarily low. He told me he loves the UK because it’s a place where anybody can come and have a go at making themselves a success, knowing the odds are not stacked against them if they work hard enough.
Let’s cut through all the meretricious nonsense being written about the radical financial and fiscal reform Modi has unleashed.
‘India’s Prime Minister Has Singlehandedly Crushed The Economy With His Reckless Cash Ban’ runs the headline of one of the latest articles condemning the so-called ‘demonetisation’ unleashed by Modi in India. ‘Modi is quickly solidifying his place as one of monetary history’s biggest idiots’ it adds, before going on to display even more staggering ignorance and error than many of the other hundreds of similar articles on this subject have done.
Will the RBI’s new governor be a stalwart and hold the line against inflation as Rajan did?
In three days’ time Urjit Patel will take up his post as the Reserve Bank of India’s new governor. He was previously deputy governor, and his promotion – which had been mooted as influenced by Modi’s old-boys network (Urjit is a Gujurati Patel) – is probably no such thing, as Patel is the eighth deputy governor to be promoted to boss of the RBI. It is a tradition.
India’s imminent Goods and Services Tax (GST) will at last release the brakes of the Indian economy as everywhere else slumps into negativity
This does have to do with India’s GST, so please bear with me for a couple or three paragraphs.
Retail and commercial banks make money on the spread – the difference between the rate at which they charge interest on credit extended (money out – assets) and the rate at which they pay interest on deposits (money in – liabilities). Therein lies the problem with zero or negative interest-rate policies (NIRP, ZIRP) currently decreed by central banks. A bank cannot offer any interest to depositors if – because of ZIRP – its loans are paying anaemic income. Even if a bank receives, say, 2% on credit extended, it will not cover its costs – let alone make enough profits to survive in a competitive market – unless it offers -1% or less on deposits. Many banks, even Deutsche Bank, are already on the point of expiration and this regime will only make financial euthanasia across the industry the norm.
India may well regret seeing off a sober money-man if it now lets slip the dogs of boom
This weekend saw the announcement by Indian central bank chief (and former IMF director) Raghuram Rajan that he would not take up a second period where, appointed by the previous Congress administration, he has been in post since 2013. Instead, Rajan will return to the University of Chicago’s Booth School of Business. There he is Distinguished Service Professor of Finance, and has been on an extended sabbatical that has seen him steady and even turn around India’s economic situation.
At least that is what some say. Others, such as deadly loose cannon Subramanian Swamy, who campaigned for his removal, accuse Rajan of hobbling India and indulging in egotistical grandstanding, to the government’s and the nation’s detriment.
India’s massive and growing workforce represents either nightmare or dream scenario, depending on your outlook
Twelve million young people arrive on India’s job market every year; relentlessly, one million extra souls each month are looking to find work. There are two extreme ways of viewing this situation: either it’s an intractable disaster caused by massive overpopulation that is going to lead to starvation and economic meltdown, or it is the most blessed economic benefit that any country has ever experienced.
Because of its social structure – with large families and an agricultural basis, even now – a good proportion of India’s ceaselessly emergent workforce is simply absorbed into the fabric of the existing economy. The school-leaver will go to the field or behind the counter of the family business. That is not to say such a situation is economically efficient or ideal, or that it is best for a majority of the new workers, whose potential may be wasted in such unambitious occupations, adding only marginally to or even dividing the fortunes of family and country.
Business hero Vijay Mallya broke his dignified silence to speak to the FT.
As I write, Kingfisher airlines and beer boss, or rather ex boss, Vijay Mallya, is holed up in his ugly oversized Barratt home just around the corner from me here in North London; indeed so close that I can almost smell his distinctive scent of privilege, greed and egomania – traits characterised by a better writer than me as ‘sociopathic’.
India, which is owed 9000 crore rupees (nearly a billion pounds sterling, or £935,394,495 to be precise) by that genius of business – who is certainly not a corrupt gangster and thief despite what it might say in the arrest warrants – has tried to persuade the UK to deport Mallya back to his home country from whence he scarpered or made himself scarce on March 2, one whole day before his creditors were able to have his passport impounded.
But the UK demurred: ‘Sorry old chaps, but this Vijay fellow hasn’t actually committed any crimes on British soil so we’re afraid our hands are tied. Love to help if we could and all that. You might try extraditing him. We probably wouldn’t actually raise an objection if you went that route. Probably …’
Regarding the cynicism expressed about India by Peter Ziehan (see previous post), I was pondering the real-life probabilities of India actually making economic progress beyond the mean of its previous performance. The so-called ‘Hindu rate of growth’ of barely above 1% – often the historical norm under the socialist state planning of the classic Congress/Gandhi-dynasty years –hopefully has disappeared forever. A better rate was jump-started back in the 1990s by the PV Narasimha Rao administration, and then continued by the BJP until they were ousted in 2004. By 2013 Congress had managed to put the brakes back on, but India is now pootling along at +7% growth per annum according to GDP. Granted, GDP’s a terrible measurement as it only counts economic activity, not profitability or productivity. But India’s is the best rate in a bad neighbourhood – the neighbourhood being this planet right now.