Friday, December 16, 2011

Tie-coons on the tube: Experts' opinions on economy

During the placement interviews at college, a Keralite friend  liked to call the ubiquitous tie-on-the-shirt as "trappings of mediocrity" possibly because it served no pressing functional deficiency. While watching the attire of numerous corporate & financial experts comment on RBI's credit policy today ,I couldn't but notice those colourful noose-ropes & remember that adage.
All through the week , leading up to today's announcement of credit policy, these experts had waxed eloquence on how inflation and growth have come to a Pareto-optimal point where one could no longer co-exist along with the other.People apparently still expect the "domestic-market-demand" story of the last decade to be replayed and hence drop in interest rate to boost investment demand was the common refrain from all. But when the RBI decided to keep the rate unchanged they kept on complementing RBI for the correct decision taken. And what decision did RBI take? Nothing! The usual editorial in the business papers had earlier severely criticized the government for their "policy-paralysis" and wailed as to how the foreign investors had turned their back to India because of poor governance and slowing down of growth. And when now the Reserve Bank doesn't do anything again , by remaining in the paralytic state, they all go running to the public complementing the same government.
But wait, the same malaise is reflected on the international channels again. The experts there were croaking in a chorus about an year ago about the uselessness of the dollar and how the Chinese economy will be torn to shreds by the "junk" US treasury bonds they hold in trillions. Now suddenly, the distinct possibility of multiple-sovereign-bankruptcy in Europe , there is demand of dollars as oil prices dip thanks to a increase in production cap by Saudi Arabia led OPEC.And the Chinese seem to be rich again and these same experts are singing paeans on the good looks of the green bucks.


Isn't economics fashionable, whether international or national? Experts always side with what's in fashion. Dollar was previously out-of-fashion and now it's in. Same for the Indian government. First out then in.
No wonder all these experts were wearing their colourful ties. It complements the fashionable topic they are always on.

And just as the favourite quote of mediocrity is "If you can't convince then confuse..", the Indian economy seems  "tie"(d) up in all kinds of  knots : high inflation (core & food ) , high interest rate, falling stock market, depreciating rupee, faltering growth & expanding fiscal deficit. The escape route probably requires deep insight into finance & economics as well as in politics & philosophy but the best escape route for bureaucrats is to escape the problem altogether. 

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