Why Hayek first missed and then moved towards Free Banking?

July 22, 2015

Prof. Geroge Selgin has a piece on this. (Update:Joseph Salerno of Mises says Prof Selgin is partly right; this is how we figure the history of thought)

One would imagine someone like Hayek would favor free banking (banking system without a central bank running their own currencies) right from the very beginning. But no. This transition/change of views happened fairly late:

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Ease or regulate living in India??

July 22, 2015

Zubin Tucker, a British student reflects on his experiences in India. He does not undrstand why things which should be easy are so restrictive (like drinking age) and things which should have some regulation are so easy (like following traffic rules).

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Guess who feels good about Greece?? Global investors..

July 22, 2015

The ones who bring trouble are also the ones who seem to be enjoying the most from Greece mess.

Matthew Winkler of Bloomberg has a story:

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Hungary under Orbán: Can Central Planning Revive Its Economy?

July 21, 2015

Simeon Djankov of PIIE has a nice piece on Hungary’s political economy.

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Paradise Lost: How Simla s struggling to maintain its old world charm

July 21, 2015

The title of John Milton’s verses Paradise Lost fits most of India’s cities. Quite a few historic cities in the west have managed to maintain their historic past despite rapid urbanisation. Not so with Indian cities which are in the middle of nowhere – neither historic nor modern.

Here is a nice tale of Simla lost in a similar transition.

Have banks become today’s tanks? Their attempted coup in Greece..

July 21, 2015

He reflects on the ongoing Greece crisis (for how long will it continue). He says how earlier tanks took over countries and now it is banks:

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What future of Exim Bank of India?

July 20, 2015

The charter for US Exim Bank collapsed on 1 July 2015. It is now on the path to closure.  What remains of existing Exim Banks in other countries? For instance, India’s own Exim Bank?

Exim Bank India chief thinks it will get more business post closure of its US counterpart:

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Ease of doing Business in India: Seems more of hype as of now..

July 20, 2015

Jyotsna Narang, a young entrepreneur, narrates her story of trying to get a loan recently.

She was highly enthused over recent promises by govt to ease doing business. Though, it was just a wake-up call.

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IMF might actually be asking Europe to adopt more socialism!!

July 20, 2015

IMF is seen as this uber platform for pushing capitalism and free markets down its member’s throats. The even mention of the letter S (for Socialism) and C (for controls) in the corridors of Bretton Woods institution is enough to land one in trouble. Though, post crisis, IMF has accepted C (as in capital controls) in a real change of heart.

However, if one thinks of IMF’s role in crisis it is just the opposite. It usually wants a super strong government/technocratic team to push its ideas despite strong opposition from the public. This is actually not democratic capitalism which IMF wants to be seen as pushing but abject socialism. In socialism only we have seen super strong governments just pushing things at people’s throats irrespective of public opinion.

The same is happening in Europe as well. Ryan Mcmaken of Mises quotes from an article in NYT:

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Why India doesn’t need the sanitary napkin revolution? Myths and Reality

July 20, 2015

A fascinating article on how narratives are built to sell certain products. It is ironical that companies which sell products are actually not doing the same in their home countries. Sanitary napkins seem to be such an example.

Sinu Joseph, a hygiene counsellor, exposes many a  myth regarding this matter:

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16 deaths every hour: Indian roads claim the maximum number of lives in 2014

July 20, 2015

As India is still learning to build sustainable all weather roads, we are way off designing road safety measures. It is both amazing and horrific to see the callous approach of oiur authorities while building roads.

The end result is more and more road accidents and deaths:

Indian roads were at their deadliest in 2014 claiming more than 16 lives every hour on average. Over 1.41 lakh people died in crashes, 3% more than the number of fatalities in 2013. The numbers of crashes and of people left injured were also the highest levels since the recording of such data started in India—at 4.5 lakh and 4.8 lakh respectively.

According to the latest data released by the National Crime Records Bureau (NCRB), speeding and dangerous driving were the biggest reasons for road fatalities. Accidents involving two-wheelers and trucks & lorries accounted for nearly half of the lives lost in road crashes.

While 13,787 two-wheeler drivers were killed in crashes, 23,529 other people were killed in accidents involving these vehicles, while close to 1.4 lakh people were left injured in them. Over-speeding accounted for about 1.7 lakh crashes and nearly 49,000 deaths and dangerous/careless driving or overtaking claimed another 42,000-plus lives in 1.4 lakh crashes.

It is not that govt alone is responsible. People too are a part of the problem. Most who drive recklessly are overconfident of their driving abilities leading problems for both themselves and the other party in the accident.

Having said that, there is little doubt that road design can go a long way towards mitigating such accidents. Random roads come up from no where having no signs and instructions. Road maintenance is so so poor that people get killed trying to avoid some blackhole or the other.

Road accidents and deaths do not get the same negative publicity like other disasters. Only time road accidents are discussed is when there is a celebrity involved. But reality is roads kill far more people and happens at a fairly regular rate. They are actually increasing here. But somehow it continues to miss the attention it actually requires.

Build up of forex reserves is actually dollar colonisation

July 17, 2015

It is amazing to note how history is quickly forgotten. Leave history, even current times are ignored just to fit one’s agenda. There is a huge belief that it is high forex reserves which are the safeguard for Indian economy. The same reserve building was criticised greatly pre-2008 period as RBI should only do inflation management and not intervene in forex markets, build up of forex reserves is inflationary, forex reserves distort economy as one issues MSS bills and so on. Even currently, China has the highest forex reserves in kitty and all via its current account surplus (unlike India’s forex reserves which are mainly via short term capital flows) but is unable to keep global threats away. And then post 2008-crisis, Korea could not keep off speculatiion fears away despite pretty high forex reserves as well.

In nut shell, India is safer not because of forex reserves but just because we have kept ourselves relatively closed to world economy. And then compared to world, our macros are not as bad (it is always a relative game). However, our policymakers and media prefer to sing their own tunes.

Infact, one should actually be questioning all this forex intervention business as India had opted for inflation targeting. Earlier, the view was we need to target multiple things as in an emerging economy we cannot just stand by and let certain things like exchange rate go awry. In IT, the first thing central bank does is give up exchange rate management. The forex assets begin to be piled up at banking level and not at central banks. Central banks can instead sign up swap lines with advanced countries in case there is a shock. A swap line ends up being a much cheaper option as well.

C Shivumar has a piece on how all this forex reserve build up is not really chest thumping. It is actually the opposite – it exposes you to dollar policy:

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Will computers replace human intelligence in finance?

July 16, 2015

Prof Shiller does not think so.

He says this vision of financial singularity where computers shall replace a fund manager and markets become super efficient is unlikely to happen:

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What does digitalisation mean for banking sector?

July 16, 2015

This speech by Dr Andreas Dombret of Bundesbank is for German banking sector but actually applies to any country’s banking sector.

He says simply sitting and watching will not help banks. They have to figure out ways to get more and more digital in quick time at that:

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Is American Government in Decay?

July 16, 2015

A nice and rigorous review of Francis Fukuyama’s recnt work on Governance and insitutions:

 

Sen vs Mehta on state of Indian higher education..

July 16, 2015

It actually should not have been a case of (Amartya) Sen and (Pratap Bhanu) Mehta critiquing the state of  India’s higher education. But has unfortunately become a case of Sen vs Mehta. Anything Prof Sen says these days becomes a controversy.

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Everyone in India thinks they are ‘middle class’ and almost no one actually is

July 15, 2015

Another myth of Indian economy goes down.

Rohan Venkataramakrishnan reports on research on India’s middle class:

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The lessons from Lords of Finance were wrong interpreted..

July 15, 2015

Lords of Finance was a stirring book. It bought alive the events of 1920s with its terrific narrative on how a few men actually bought disaster onto the world economy. These few good men were the central bankers of US, UK, Germany and France. The narrative then was these central bankers did not do enough to bail out their economies. To emphasize, they did not let go off gold standard which converted a crisis into a large scale depression.

Cometh 2008 crisis and central bankers just did the opposite. They let all hells break loose and intervened in ways never imagined before. However, the results are not really different. The same havoc continues.

Alexander Friedman, Group CEO of GAM Holding, reviews the lessons:

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Where are India’s subject matter specialists?

July 15, 2015

Subject matter what is that? Specialists what is that too?

Chinnu Senthilkumar of Exfinity VC fund raises questions on subject matter expertise in India:

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A Bollywood take on the Greece crisis …

July 15, 2015

Prof. Manasi Phadke keeps getting better and whackier with her posts.

The latest is a Bollywood take on the Greece crisis:

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