Archive for January, 2017

Thank you Rahul Dravid!

January 26, 2017

One does not understand the logic of conferring honorary doctorates to individuals. That too some of these doctorates are given to people who have not even completed Bachelor levels. A doctorate is such a challenging thing to complete (provided one does it properly) and to see one get it so easily is such a pain.

So thank you so much Rahul Dravid for not accepting the honorary doctorate offer by Bangalore University. A double thanks saying you would rather get a doctorate by doing research in sports. Atleast you appreciated the efforts by the doctoral students! Though, it will be amazing if you did some research in sports studies. Who better than you?

The respect for this individual keeps rising for he never seizes to amaze you with his simplicity and humility. There are others and there is Rahul Dravid.

Going for gold: Trump, Louis XIV and interior design

January 25, 2017

Robert Wellington (Lecturer of Art History and Visual Culture at Australian National University) has a piece on the topic.

US President Trump has replaced the crimson curtains in White House with golden ones. Then there are articles which mention Trump’s interest in anything golden and its usage in his interior design. Some have compared this to Louis XIV.

Wellington adds some perspective:


The Long Economic and Political Shadow of History

January 25, 2017

Voxeu team is coming up with a series of three e-books (free) all of which make one’s eyes to lighten up.

The first one is there on the website:

 Volume 1 of the e-book starts with our more detailed discussion of the recent literature on economic history that aims to explain the considerable persistence in economic and political development. It also includes some additional introductory chapters that review works on the spatial distribution of development, as depicted in satellite images on light density at night, summaries of fascinating new papers on the macrogenoeconomics of comparative development, and studies on environmental economic history. Next, it includes chapters which explore watershed events that have global repercussions, such as colonisation, the role of the Enlightenment on the Industrial Revolution, and the spur of commerce during the first era of globalisation.
The chapters in Volume 2 (forthcoming) feature research on the deep origins of African development and works on the legacy of colonial practices in India, China, and Australia. They cover a diverse set of major historical issues, such as the impact of the slave trades, colonial divide-and-rule policies and investments in infrastructure and human capital, the legacy of British direct and indirect rule in India, the long-lasting effect of convict resettlement in Australia, and the role of colonial ports in China. 
Volume 3 (also forthcoming) focuses on Latin and North America and Europe. The chapters on the Americas cover a plethora of colonisation-related events, such as the legacy of the mita (forced labour system in Peru), the role of Christian missions, the resettlement of indigenous communities in reserves in North America, and many more. The chapters on Europe discuss, among other topics, the role of the Protestant Reformation on industrialisation and the legacy of the Holocaust, Nazi occupation, and communism on social structure, politics, and norms. They also cover research tracing beliefs, trust and norms related to trust and social capital to the medieval times.


RBI board and Committee of Central Board: Comparison against international benchmarks

January 25, 2017

A forgotten Board ha stolen the limelight like no other.

Ila Patnaik and Shubho Roy compare RBI Board to Bank of England and Federal Reserve Boards. Obviously, RBI is least transparent. Actually, why go that far. As this blog shows, one could learn lessons from SEBI’s Board as well but we hardly look at it.

They say RBI Board is like any other and should be governed by similar laws:


Composition of RBI Board (1999-2017): A glass how empty or how full?

January 24, 2017

RBI’s Board has just come back to centre of research on India’s monetary policy. One just looked at history and evolution of RBI Board from a 14 member team to a 21 member team.

The question that keeps coming to mind is how empty was RBI Board on 8 Nov 2016? Former RBI chief Subbarao in an interview said there have been precedents in the past as well:

Q: There are only three members of the RBI board, external members. The rest are all RBI Deputy Governors and Governor and Finance Ministry officials. The fact that 6-7 seats are vacant, did all this already pave the way for very weak opposition?

A: I do not think so. I think that is reading too much conspiracy into this. There have been several instances over extended period, the RBI board was not fully positioned. At least on the specific point you are referring to that the RBI board is not fully positioned. Yes, that is a shortcoming, that is not desirable, but to see some conspiracy in that and to say that the decision on demonetisation would have been any different or the implementation would have been any different if there had been seven more members on the RBI board is unrealistic.

One just dug up data from RBI’s Annual Report and came with following:


What is in a name? Withdrawal of Specified Bank Notes vs Demonetisation..

January 24, 2017

There is always this confusion about what to call the currency exercise of 2016.

The Parliament/media/experts call it demonetisation but the official notifications of Government/ RBI insist calling it  ‘Withdrawal of Specified Bank Notes ‘ and so on. The word demonetisation is not mentioned in official notices.

I somewhat got part of the answer from Jairam Ramesh’s book on the 1991 crisis- To the Brink and Back. It is a light account of the 1991 crisis explaining (but not emphasising) on the political negotiations behind the 1991 crisis. How the government sold the tricky changes to both within the party and the opposition. One wishes the account was longer but he just focuses on the first few months of the 1991 crisis,. But that would have taken the crispiness of the book. So it is a trade-off between a breezy read and elaborate one and the author has chosen the former.

In the book, he mentions how government and RBI went about devaluation in July 1991. Indian Government devalued the currency two times on 1 July 1991 and 3 July 1991. To keep the political pressures off, both the Government and RBI did not call it devaluation (pg 38):


Indian Financial Sector: Structure, Trends and Turns (1950-2015)

January 24, 2017

A new paper by Rakesh Mohan and Partha Ray.

The highlight of the paper is its coverage of insurance industry which is usually ignored from all such financial sector analysis. Thanks to the paper one came to know of Insurance Handbook prepared by IRDAI which gives some data on the sector which is least known. This handbook is a good practice as SEBI also releases handbook on securities markets.


Hedge-fund managers are buying air strips in New Zealand in case…

January 24, 2017

An interview of Rob Johndon, President of INET.

He says one indicator to look for is the elite anxiety which is rising . As a result, the top elites in US are buying private spaces in New Zealand and private planes to fly there:


Chala market: origins and evolution of the busiest market in Thiruvananthapuram

January 24, 2017

Just learnt about this historic Chala market in Thiruvananthapuram. Tripadvisor ranks it as 26 of the 114 things to visit in the city.

How the market was shaped by a visible hand – Raja Kesava Das – the dewan of the region:


‘European culture’ is an invented tradition?

January 23, 2017

Benjamin Martin 0f Uppsala University in Sweden has a food for thought piece.

He says idea of European culture was invented sue to rising fears from US and USSR:


A more effective way to learn about history of economic thought…

January 23, 2017

I came across this website: which is going to be used a lot by this blog in future.

It has this wonderful resource page on history of economic thought with this superb picture summing the core of most schools:


This is amazing!

As they say: A picture is worth thousand words and here it is worth much more than just thousand words.

These schools of thought are compared across different questions and issues. THese together should help develop comparative perspectives on these schools.

There are videos and lectures on the site as well. Do take a look..


Are there any banks on New York’s Bank Street?

January 23, 2017

Amy Farber of NY Fed’s Liberty Street blog has an interesting post.

She points how NY’s Bank Street does not have any banks. Infact, it is not even the street where banks were originally localted. It is a street where banks relocated due to yellow fever in NY:

Bank Street in New York City is a quaint little six-block stretch in Greenwich Village (see this 48-second video) with a huge cultural legacy—but no banks. Many cities and towns have a Bank Street and often the street is so named because that’s where most of the banks were originally located. (It is not likely that any Bank Street got its name because of its proximity to a riverbank.) However, New York City’s Bank Street is not where the banks were originally located and it’s not even in the financial district—it’s in Greenwich Village. Why, then, is it called “Bank Street?”

Okay, we cheated in that last paragraph. Manhattan’s banks were not on Bank Street originally but they were indeed there at some point—they moved northward from Wall Street in the late eighteenth and early nineteenth centuries in an effort to escape yellow fever. A post on the Forgotten New York website explains how there were two main waves of the epidemic in the city and that Bank Street was essentially named for the first bank to relocate, not the set of banks that eventually moved there:

Though most neighboring streets are named for local personalities in the Village’s early days (one early burgess, Charles Christopher Amos, had three streets named for him), Bank Street is named for one of the oldest institutions in NYC, the Bank of New York, which opened an office “uptown” after a yellow fever epidemic downtown on Wall Street in 1798 prompted a relocation. Several other banks followed suit in 1822 after a second outbreak.

One can view this relocation of banks as an early form of corporate contingency (or business continuity) planning. Think about how important continuity is in banking and how advantageous it would have been to keep those early New York banks functioning. In his 1922 book A Century of Banking in New York, 1822-1922, author Henry Lanier describes, in the chapter “The Year the Banks Migrated,” the Bank of New York’s forethought:

Some bankers and others had been more foresighted. As noted, one of the first deaths in the scourge of 1798 was a book-keeper in the Bank of New York. “Fearing another visitation of the pestilence, the bank made arrangements with the branch Bank of the United States to purchase two plots of eight city lots each, in Greenwich Village, far away from the city proper, to which they could remove in case of being placed in danger of quarantine. Here two houses were erected in the spring of 1799, and here the banks were removed in September of that year, giving their name, Bank Street, to the little village lane that had been nameless before. The last removal was made in 1822, when the yellow fever raged with unusual virulence, and the plot which had been purchased for $500 was sold in 1843 for $30,000.”

In this 1842 map of lower Manhattan, you can see Bank Street just to the right of the large “E” of the “Hudson River” label. (Here is a 1933 street view.) Of course, Wall Street is in the bottom tip of the island. Bank Street is about 2.7 miles north of Wall Street. Yes, it takes a bit of time to walk from one to the other—but not that long. 

There is further discussion on how such a small distance relocation helped banks.


Was US behind India’s demonetsation? Lessons from crisis when US bailed out the RBI in 1940s..

January 23, 2017

Srinath Raghavan has an interesting piece.

He says there are conspiracy theories on whether US was behind demonetisation? He picks lessons from 1940 silver crisis when US bailed out India. He says main thing is credibility of Govt and RBI which was an issue then and will be an issue today:


Role of stamps in today’s world…

January 23, 2017

Santosh Desai reflects based on his recent visit to a post office after a long time:


How Governments of Andhra and Telangana are fighting over property in Delhi!

January 20, 2017

Leave disputes within the region. The disputes between AP and Telangana are moving beyond borders to fight for assets and liabilities.

The fight is now for AP Bhavan in Delhi:


UP Elections: It isn’t development versus caste, but development through caste.

January 20, 2017

An interesting story on UP elections via journey of two houses.

Both the mud houses got developed due to Lohia Housing Scheme started by the current SP Government:


The history and importance of Section 7 (1) of RBI Act..

January 20, 2017

Some commentators have invoked Section 7 (1) of RBI Act to suggest the RBI Board had no choice but to go ahead with the 8 Nov 2016 move.

Section 7 (1) says:

[7. Management.

(1) The Central Government may from time to time give such directions to the Bank as it may, after consultation with the Governor of the Bank, consider necessary in the public interest.

Given one was trying to figure RBI Board History, I came across why this section came into being at the first place.

As argued earlier, RBI started as a shareholder bank with Board nomination coming from both Government and shareholders. However, while working towards RBI’s nationalisation the shareholder angle did not matter anymore. A Bill was prepared to amend RBI Act.

In the  bill, on one of the points RBI Governor suggested that in case of differences between the two, the government should take responsibility for their action. However, Finance Ministry refused this and added what is now seen as Section 7 (1). From RBI’s First History Volume:


Evolution of RBI’s Board (1935 onwards)

January 20, 2017

Despite one wanting to withdraw from Currency Withdrawal exercise, it continues to ask questions and remains exciting.

The role of RBI Board in the exercise which was a mystery in the early part of the debate (not for the readers of this blog ) has become a major issue now. There are comments on both side of the debate. Some suggest the role of RBI Board shows how RBI has lost its autonomy and others who suggest this is not the case. Then there were concerns raised about FSLRC’s suggestion on reducing the RBI Board strength which has not been commented by anybody.

As there is so much chaos, it is best to get back to genesis. How did RBI Board evolve?


Legislating Instability: Adam Smith, Free Banking, and the Financial Crisis of 1772

January 20, 2017

This is the title of a book by Prof Tyler Goodspeed. A brief of the book is here.

The failure of Ayr Bank in 1772 was a turning point in financial history. It led to change in thinking of Adma Smith who till then favored banking free of government regulation. Thus, this event continues to inspire financial historians who look for different viewpoints to explain the crisis.

Prof Hugh Rockoff reviews the book and sums up:


The FinTech Bullshit Detector…

January 19, 2017

Chris Skinner wonders how so many Fintech companies are surviving?

He says given the large numbers already, next time someone tells you about this new finance technology just scream 🙂 He has prepared a list of things which help you detect FinTech Bullshit:


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