Comments on: India and China: Not so decoupled from the global downturn

By: Quinn Gravelle

Quinn Gravelle — Sun, 05 Jun 2011 21:40:49 +0000

We are a group of volunteers and starting a new scheme in our community. Your site offered us with valuable info to work on. You’ve done an impressive job and our entire community will be thankful to you.

By: SREERAM MUSHTY

SREERAM MUSHTY — Mon, 05 Apr 2010 16:54:44 +0000

In absence of global uniform currency most finance and investment data would be misleading and distorts economic decisions. There is demand and competency among various countries in the world to put forward their currencies as global making their currencies exchangeable involving multiple exchange gyrations enhancing finance deficits in every country in the world to capture economic resources making world economy as highly debt financed consumerism that was born in developed world and diffused to developing world too with shift of employments and absence of achieving full employment in the global village. In the process big investors and employee managers are managing loosely coupled finance, investment, tax and bank laws to their favour hoarding large currencies in tax and bank heavens as there exists no multilateral investment and finance laws in the global village. In the process there is relocation of capital formations with rat race among large investors hoarding their profits and gains in tax and bank heavens putting all countries loosely coupled at the comfort and convenience of big investors who are today controlling policy makers of the world with their cartelised lobbying. Issues cannot be addressed by comment. Already I happened to address the issues of our global village in the book CHALLENGES BEFORE GLOBAL VILLAGE in Doha and beyond and another research study undertaken and completed for the Institute of Chartered Accountants of India on CROSS BORDER MERGERS AND ACQUISITIONS that was approved in principle with pending final approval by Members of the Committee on Trade and Economic Laws of the said Institute. Thanks for inviting me to comment. Presently I am doing research on the necessities for Global Uniform Currency looking for viability and implementation with needed methodologies for the same in the Global Village.

By: T R Nagesh

T R Nagesh — Mon, 05 Apr 2010 12:29:22 +0000

There has been a major shift in the attitude of Indian and Chinese customers towards credit. They have been open to credit notwithstanding their financial condition. With retail credit still constituting a small percentage of total advances compared to other S.E.Asian countries, there lies a huge scope of credit growth. In due course, demand is set to rise in this two countries, though the rise may be steady. As such, the notion of decoupling still holds good.

By: Karl Eysenbach

Karl Eysenbach — Thu, 01 Apr 2010 15:22:03 +0000

It seems to me that globalization has helped to produce a “death star” economy. Like the ship in Star Wars, it provides an inpregnible defense until something goes wrong in just the right case. This was certainly the case with the CDO markets as managed by Merrill Lynch, AIG, Bear Stearns, and Lehman Brothers.

The sophistication of marketing private credit instruments globally coupled with the laxness or inability of the Federal Reserve or other regulatory agencies of the United States led the way to the current crisis. Given the current state of governance in Washington, it’s highly unlikely that full and adequate standards of re-regulation can be adopted by the US government.

And this situation is compounded by the conflicting financial regulations of the G-20, which should ideally be sufficiently harmonized to define what are levels of acceptable vs. unacceptable risk.

The net result of the current situation is to create conditions of arbitrage that can be exploited by hedge funds and other major movers of financial capital to their own advantage, and to the disadvantage of everyone else.

Clearly, some kind of worldwide monetary authority is needed to control this or any other type of financial conflagration. The economic issues alone between the US and China are enough to provide the environment for another catastrophic breakdown of the system in the future.

So, the ultimate question is, what form should a world monetary authority take, given that national differences impede co-operation and implementation of uniform regulatory standards?

By: Kevin P. Gallagher

Kevin P. Gallagher — Wed, 31 Mar 2010 14:50:50 +0000

Latin America, despite news to the contrary, is also far from de-coupled from the crisis. Indeed, the region has been hit by three channels–trade, remittances, and corporate debt. Most of the Latin American growth in the run-up to the crisis was driven by trade. So, of course when trade collapsed so went LAC economies. ALso, many Latin Americans, especially Mexicans and Central Americans, were working as laborers in the housing market and subsequently sending significant amounts of money home in the form of remittances. Indeed, despite oil booms and massive FDI, remmittances were the largest form of foreign investment in Mexico for numerous years since 2000. The housing market of course, and the US economy, has gone sour. Many of those people are out of work or hoarding their funds, to the detriment of many in Latin AMerica. Finally, Latin America became famous for its “Trans-Latins”–domestic firms that had gotten big enough to invest outside Latin America. Those firms, like most economic actors, saw global demand as insatiable. They thus borrowed in US dollar denominated bonds. When their currencies dropped as a result of the trade drop and other factors, the value of their debt of course sky-rocketed. This has left many firms on the edge, selling their assets at bargain basement prices. Indeed, CEMEX, the Mexican owned cement firm once the largest in the world, is having a firesale. It is also hoping to restructure its debt. However, some of that debt is intertwined in credit default swaps and some of the bondholders don’t want to restructure (because they make money when Cemex defaults)–accentuating the situation…

By: Matías Vernengo

Matías Vernengo — Wed, 31 Mar 2010 02:01:27 +0000

Export dependence is not the worst problem in the case of India. I was surprised at the current account position (around 4% of GDP in 2009), that has been negative and worsening since the beginning of the crisis. It is probably sustainable, but it underscores the significant differences between India and China.