The simple answer is their “knowledge”

Take a recent example.  The price of oil is going sky high. India has no clue how to manage the situation. The inflation has soared to 11% and Govt can do NOTHING. I repeat, NOTHING. They can only sit and watch.  Its same as a tsunami, you can do NOTHING to stop it.

Comparing it with USA, there are loads of discussion and research in trying to understand why its happening. Some of the best minds in economics are coming to a common platform and discussing the fundamentals.

Paul Krugman ( A nobel prize prospect)

Steve Randy Waldman

Mark Thoma 

Dean Baker

Thomas Palley  and

the best in the oil/commodities business , Jim Hamilton



This is a guest post from my friend Nick who is a financial consultant in UK.

I take this oppurtunity to quickly present some ground rules for these turbulent times in financial markets.  Make your own judgement risk-reward profile of yours.

– Do not commit to any long term debt, most particularly buying a house 
– Do not bottom fish in assets for a long time 
– Reduce family fixed cost base: rent house on a short contract, downsize expenses 
– Delay purchase of any big ticket goods in anticipation of sales Q3 2008 
– If a contractor, try to go permanent 
– If a City worker, avoid front office volume-driven jobs 
– If you have a relatively secure position at work, do not be lured away for more money, especially if it’s heavily weighted towards a bonus 
– Liquidate all assets. Hold cash across many banks below insured limit, and preferrably in different currencies 
– Save now on the assumption you will lose your income at any moment

By now everybody knows that US economy is faltering.   There were clear signs yesterday in the auto sales numbers

Ford’s US sales down 14 percent in March

GM March U.S. sales fall an adjusted 13 percent
GM Blames Consumer Confidence

Toyota says U.S. March sales down adjusted 3.4 percent

 Elsewhere, “More than 20,000 Vietnamese workers have walked off the job at a Taiwanese-owned plant that makes shoes for Nike Inc., demanding higher pay to keep pace with skyrocketing prices, officials said today. The workers at Ching Luh plant, in southern Long An province, went on strike Monday. They want a 20 percent bump to their $59 average monthly salaries along with better lunches at the company cafeteria, said Nguyen Van Thua, an official with the province’s trade union.”

There has been lot of news about Iceland recently

 Prime Minister Geir Haarde tells the FT that the island’s financial system is being unfairly and perhaps illegally weakened by hedge funds “who just want to make a profit by hook or by crook”. He says: “The central bank and the government have several means at their disposal to influence this situation and we have not used all of them yet. We would like to see these people off our backs and we are considering all the options available.” He declines to be more specific about what measures the government and central bank might undertake, saying “a bear trap needs to be a surprise”.

My Point :If Iceland can undergo a massive run, why can’t it happen to an emerging country like India ? Today’s financial system is troubled and nearly pernicious

A bit busy today.  Too many headlines to catch up on.

Today is April fools  China day.

Deposit rates are 4.1%

Lending rates are 7.5%

Inflation 8+%

Can any country run such high negative real rates ? China is clueless at the moment (And that shows in the stock market chart)

Inflation vs Wages

Average wage = 48L per annum.