Archive for May 13th, 2008

RBI releases first Survey of Forecast of Indian economy

May 13, 2008

Amidst the season of reports, RBI released India’s first Survey of Professional Forecasters. This means the Central bank conducts a survey amongst major important financial/economic research firms on their outlook on the various aspects of the economy – GDP, inflation, trade balance etc.

This is a common practice in the developed economies (see US, ECB etc) and now India also had one. It is going to be a regular feature as this press release says  and is going to be a useful guide to understand the Indian economy outlook and over a period of time as we have more of the surveys, on the changing outlook as well.

RBI also includes important statistical points for each economic variable like maximum, minimum, mean, mode etc. This will be a fantastic avenue for research in future. It will be useful to measure expectations as well.

Off balance sheet doesn’t mean out of mind!

May 13, 2008

Says Paul Volcker, the Fed Chairman in a speech at Economics Club of New York. It is a must read for insights into developments in financial markets.

This is a pretty strong statement from somebody like Volcker (which sums up what has been happening in financial markets):

Simply stated, the bright new financial system – for all its talented participants, for all its rich rewards – has failed the test of the market place.

He discusses the practices in financial markets,  perverse incentive structures, mathematical modelling, herd behavior, Fed response in a pretty lucid and scathing tone.  I liked this line on off-balance sheet vehicles:

Another highly significant area of concern has been the practice of important commercial and investment banks to move certain sponsored and related operations “off balance sheet”. That has been surprising in light of the well publicized problems of Enron and other industrial companies. Experience has again demonstrated that “off balance sheet” cannot be the same as “out of mind” or out of responsibility. Too much is at risk both financially and reputationally.

Highly rated stuff!! Also read his comments on why he favors Barack Obama.

Assorted Links

May 13, 2008

1. WSJ Points to Fedspeak – Chicago Fed President – Charles Evans and Richmond Fed President – Jeff Lacker

2. MR on Hedge Funds

3. Nudges points Spain has an automatic tax return since 3-4 years.

4. Mankiw points to cross elasticity of demand – high fuel prices lead to hig  bicycle sales

5. Jeff Frankel on recession

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