Will the new tantrum be bigger than the last one?

"New York: The Federal Reserve's term repurchase agreement (repo) operation on Friday morning received no bids out of a possible $500 billion for the first time since regular operations began last year," reported Reuters. "The Fed now offers up to $1 trillion in overnight repo support daily, along with several longer term operations, but dealers are taking only a fraction of the available cash." "The Fed's balance sheet surged to a record $5.3 trillion after growing by more than half a trillion in a week, according to data released Thursday." "A repurchase agreement (repo) is a form of short term borrowing for dealers in government securities." This is a means to provide short term liquidity by the Fed but it received no bids because of the amount of excess money in US markets. The Fed's balance sheet is the balance between its assets and liabilities. Theoretically, the Fed can buy any amount of assets by printing dollars. After the financial crisis of 2008, the Fed "embarked on a monetary experiment now widely known as 'quantitative easing' (QE): buying Treasury bonds and mortgage backed and US agency securities in the open market", expanding its balance sheet to $4.5 trillion. Now it has exceeded even that. It would be of no concern to us in India, except that we still have memories of the rupee plunging 3.7% to 69 to the dollar in August 2013, when the then Chair of the Fed Ben Bernanke hinted at reducing the balance sheet, setting off panic selling which came to be  known as the 'taper tantrum'. The Fed's actions resulted in a fall in the value of the dollar as investors stopped hoarding it. "The sell-off in the US dollar is a reaction to the liquidity measures announced by the Federal Reserve and other central banks," said Jane Foley, a currency strategist at Rabobank. "Fear may have subsided for now." Knowing there is no shortage of dollars investors stopped selling emerging markets. "As the new quarter starts Wednesday, repatriation funds will slow and the haven bid from a worsening global pandemic may fuel a resurgence in demand." The rupee has not benefited. "A massive rate cut that the Reserve Bank of India (RBI) announced on Friday now casts darker clouds over the domestic currency." The rupee has fallen to 76 to the dollar. "Meanwhile, domestic companies with unhedged dollar debts are in deep distress and there has been a clamor in recent weeks to buy covers." Just eight months back the Finance Minister Nirmala Sitharaman proposed sovereign borrowing in dollars to increase government spending in an effort to stimulate growth. Borrowing in rupees decreases liquidity in banks and pushes up interest rates. The fiscal deficit reached 135% of Budget prediction by February. Hope there is no repeat of the taper tantrum.

If our villages escape we have won.

India is caught by the coronavirus pandemic but, "Thankfully, Prime Minister Narendra Modi has acted decisively and confidently. India is now on a 21 day lockdown," wrote Prof Arvind Panagariya. Though, "the lockdown asymmetrically disadvantages those living hand to mouth", the Finance Minister Nirmala Sitharaman has announced a Rs 1.7 trillion package targeted at the poor. The assistance includes 10 kg of food grain and 1 kg of lentils per person per month, one cylinder of liquefied petroleum gas (LPG) per household and cash handouts to farmers and laborers. As the lockdown was announced millions of migrant workers rushed to get back to their villages fearing starvation, as daily wage laborers are unable to earn their living. The total number of internal migrants in the country (accounting for inter- and intra-state movement) is a massive 13.9 crore (139 million). Images have reached all over the world and have created fears of an explosion of infections with so many people packed together. The incubation period of the virus is said to be up to 14 days, which means that cases could start to emerge by 12-14 April. The 21-day lockdown started on 25 March and so should end on 14 April, exactly at the time cases are beginning to emerge in villages right across India, but "Cabinet Secretary Rajiv Gauba denied reports that the lockdown would be extended beyond 21 days. He said such reports are baseless". Besides, viruses don't just disappear. They may become endemic, which means that it could go on infecting small groups of people over a long period of time. The H1N1 swine flu came to India during the 2009 pandemic, but it caused another severe outbreak in 2015 and has affected 6 Supreme Court judges this year. Influenza vaccine is available but has to be taken every year and most people don't bother. Authorities in India, central, state and municipal, are known to throw their weight around by inventing their own rules and forcing citizens to obey using draconian means. "While the central government has come up with advisories on exemptions from curbs being implemented during the nationwide shutdown until mid-April, consumer companies and retailers are facing hurdles, with local authorities in some states frequently changing rules, company executives said." In Surat, in Gujarat, police fired tear gas at migrants when they started throwing stones as the police tried to stop them from moving out of the state. People found it funny when a video went round showing police sterilizing lathis (canes) before beating people. Poor vegetable vendors were not so amused at being at the receiving end. An article in the Daily Mail alleges ill treatment of British citizens by authorities in India. If only news could be locked down as well.  

Sports is big business, not just games.

"Following the Black Death, the plague that's believed to have killed 60% of Europe's population in the second half of the 14th century, the realization that life is short, played a big role in shaping interest rates in the late medieval Europe, stretching all the way to the Enlightenment," wrote Andy Mukherjee. As the population fell, productivity improved and wages increased due to disinflation. "The change in behavior was more stark." "Products that hadn't been for mass consumption earlier -- such as linen underwear and glass panes in windows -- became more widely available as cheap capital rushed to satiate the growing desire to consume" and "English kings attempted by issuing ordinances, repeatedly for nearly a century, to fix summer wages for masons and carpenters to their low pre-Plague levels". Will the coronavirus change behavior with working from home, more automation and universal basic income to offset changes in working conditions. The virus has brought the whole world to a standstill, never seen in living memory. As nations have gone into lockdown, flights have been canceled, with the airlines industry facing a loss of $113 billion. Prospects for airlines in India are dire. "A recent ICICI Securities report on two listed airlines, Indigo and Spicejet, forecast Indigo to post a loss of Rs 230 crore (Rs 2.30 billion) and Spicejet to report losses of up to Rs 525 crore (Rs 5.25 billion) in FY21." Airlines in India have a history of failing, the latest being Jet Airways, wrote James Asquith. This is because of extremely high taxes on aviation turbine fuel (ATF) and protection of Air India which makes it impossible for private companies to compete. With aircraft grounded, the tourism industry has come to a standstill. Up to 50 million jobs are dependent on tourism worldwide as it accounts for 10% of global GDP. All sports have been stopped which could invite a shrug. After all, sports is not an essential service. "The global sports market reached a value of nearly $488.5 billion in 2018, having grown at a compounded annual growth rate (CAGR) of 4.3% since 2014, and is expected to grow at a CAGR of 5.9% to nearly $614.1 billion by 2022." "The global recreation market, of which the sports market is a segment, reached a value of nearly $1,435.4 billion in 2018, having grown at 4.5% since 2014." The Indian Premier League (IPL) for cricket is worth $6.3 billion, more than the English Premier League of football and the National Hockey League in the US. If the IPL gets canceled players, boards and sponsors will take a big hit. All because of the filthy eating habits of the Chinese. The animal markets in China have opened up already so we could face another pandemic in the near future. The virus is an infection. The Chinese are an infestation.

The seduction of MMT.

Swaminathan Aiyar, with a masters degree in Economics, said that the Indian government should forget about fiscal deficit and just print money to stimulate the economy. "I would say just print money. In other words, the government should have extra borrowing, financed entirely by the Reserve Bank of India printing money. This will be a once and for all huge explosion of the fiscal deficit, so be it," he said. This thinking has been around for sometime and is known as the Modern Monetary Theory  (MMT). Advocates of MMT say that governments of the US, UK, Canada and Japan can print any amount of money without fear of inflation. The theory was developed by American economist Warren Mosler who made a profit of $100 million in the 1990s when Italy did not default on its debts as people feared. Supporters of this theory say that taxes and government borrowing are ways of draining excess liquidity from the system and keeping inflation in check. MMT does not apply to emerging market countries, said Prof Larry Summers which could see a situation "where people could buy two drinks at bars at one time to avoid hourly price increases". The inflation rate in the US in the year ending February 2020 was 2.3%, while retail inflation in India was 6.58% in February, down from 7.59% in January. India has one of the highest income tax rates in the world, for which taxpayers get no returns such as pensions or healthcare, and excise duty on fuel was raised by Rs 3 per liter following collapse in price of crude oil, with Brent crude at $27.95, while West Texas Intermediate (WTI) is at $21.51 per barrel. Prime Minister Narendra Modi announced an almost complete lockdown in India so that people are not allowed to go out except to buy food and medicines. This means that very few vehicles are running, which means that sales of fuel have plummeted, thus reducing tax collection. Malls and restaurants have been shut down bringing goods and services tax (GST) collections to almost nothing. States in India collect revenue from taxes on alcohol, fuel, aviation fuel, stamp duty on real estate sales and on sale and registration of automobiles. Alcohol shops have been shut so no taxes there. International flights had been suspended earlier and now even domestic flights have been stopped. The central government is supposed to share GST collections with the states but with collections down there is little in the pot to share. The US has passed a bill to spend $2 trillion which is 10% of its GDP, while India is spending just 0.5-0,8% of GDP to help its people, which is pathetic says Aiyer. Perhaps, India is looking over its shoulders at Venezuela. Economists say that when something appears too good to be true, it definitely is. Aiyer should know. 

We can only pray that the virus doesn't infect the rupee.

"New Delhi: Finance Minister (FM) Nirmala Sitharaman on Thursday announced Rs 1.7 lakh crore (Rs 1.7 trillion), named Prime Minister Garib Kalyan Scheme, aimed at taking care of the poor, urban and rural workers, and those in need of immediate attention." "Under Pradhan Mantri Garib Kalyan Ann Yojana, FM announced 5 kg of rice or 5 kg of wheat for the next three months. This is in addition to 5 kg of rice or 5 kg of wheat, the government is giving at present. In addition, FM announced 1 kg of pulse for the next three months via public distribution system." In tandem, "Mumbai:The Reserve Bank of India (RBI) on Friday cut interest rate by 75 basis points (bps) -- the sharpest in over a decade." This was done to decrease the borrowing cost of the government. The RBI borrows money for the government by selling bonds and, "The 10 year benchmark bond yield dipped 22 basis points to as low as 5.98% before paring some of its gains." Question is whether there will be demand for bonds at these lower rates because on 24 March, "For half an hour after trading started, nobody bought or sold a bond on the Reserve Bank of India's platform." Also, "RBI slashed the cash reserve rate (CRR) by 100 basis points to 3% of bank deposits straight away unleashing Rs 1.37 lakh crore into the banking system for the next one year." CRR is the proportion of deposits that banks have to hold in cash so as to be able to meet sudden withdrawal demand. Boosting liquidity in banks was necessitated by the withdrawal of Rs 530 billion by depositors from banks in the fortnight ending March 13. The rupee has been falling against the dollar because foreign funds have been selling Indian equities, at one point falling below 76 to the dollar. The fall in interest rate should be a disincentive to carry trade, because, although the Federal Reserve slashed interest rate in the US to 0-0.25%, investors have to factor in any future fall in the value of the rupee. Strangely, the rupee has hardened to 74.876 to the dollar. This maybe a reaction to the news of an enormous rise in the number of coronavirus patients in the US to over 100,000 and investors fear a recession in that country. Foreign exchange reserves have dropped by $11.98 billion in the last week maybe because of repatriation of dollars by foreign investors and sale of dollars by the RBI in an effort to support the rupee. Selling dollars reduces the amount of rupees in banks so the RBI cut CRR to increase money supply. The RBI paid Rs 1.76 trillion to the government from its reserves last August. The rupee is the key. It plunged from 53.67 against the dollar in May 2013 to 69.13 in August, just on talk of tapering quantitative easing in the US. On the one hand, sale of dollars and bonds reduces liquidity, while reduction in CRR increases it. What this does to the rupee the future will show. We can only pray that the virus will go away. 

Virus will pass, stamping will continue.

"Last week, the mayor of Ecuador's largest city ordered the international airport's runway blocked to prevent a KLM airliner from landing to pick up Dutch tourists stranded by the coronavirus." Apparently, she did it to protect residents of her city from the virus. Politicians are arming themselves with extraordinary powers "made possible only by rapid advances in technology. and while citizens across the globe may be willing to sacrifice civil liberties temporarily, history shows that emergency powers can be hard to relinquish". In India, "officials are tracking mobile phones, pulling out reservation data from airlines and railways, and stamping people's hands with indelible ink". "When I first heard of the stamping in Mumbai, I thought it was fake news," said Supreme Court lawyer NS Nappinai, an expert in data privacy legislation. Nothing unusual. Governments in India, both central and states, are known for their brutality, beating and humiliating citizens with little provocation. A 32 year old man died in West Bengal after being thrashed by the police. Maharashtra is using a law, enacted by the British in 1897 to combat Bubonic Plague, to stamp people flying in from countries with virus epidemic. The Act protects authorities from litigation for any action, however draconian or lethal. Milady, the Countess de Winter, had been branded with a fleur de lis in Alexander Dumas's novel 'The Three Musketeers'. Ironically, the fear of authorities drove thousands of migrant laborers to rush to stations in Mumbai and pack into trains to get back to their villages. When train services were stopped migrants from Rajasthan started walking home from Ahmedabad in the adjoining state of Gujarat. The chaos caused by the coronavirus is similar to the events at the beginning of the 20th century, wrote Pankaj Mishra. "The opening years of the 20th century, too, were defined by a free global market for goods, capital and labor." "As with our own crisis, the seminal crashes of the 20th century -- the First World War followed by the Great Depression -- were harder to grasp because their principal causes were set in motion decades before and largely neglected by mainstream politicians and commentators." "In the interwar era, an expanding state assumed unprecedented powers over its citizens, metamorphosing in some countries into outright fascism." Governments are assuming unbridled powers to contain the pandemic. "Certainly, the techniques of surveillance available to the contemporary state, starkly evident in China today, can only further restrict human rights and liberties." With facial recognition technology and Aadhaar, India is not far behind China. The virus will pass, but we will continue to be stamped. Into submission.  

The difference is in how much we can print.

The US Senate finally passed a $2 trillion spending bill to support small businesses and those who have lost jobs due to the coronavirus outbreak. This is in addition to the $700 billion that the Federal Reserve will spend to buy mortgage backed securities and corporate bonds and to increase liquidity. Total spending will be almost equal to India's gross domestic product (GDP). Travel industry, restaurants, car sales and industrial production are falling precipitously. The price of crude oil has plummeted to its lowest level since June 2001. With people being restricted indoors and commercial activity at a minimum, pollution levels are falling. "Mumbai: For the third time in three days, the Wall Street brokerage Bank of America Securities has lowered global growth projections on Friday to zero, saying the world has already plunged into recession because of the coronavirus pandemic." It lowered India's June quarter growth rate to 3.1%. "The US recovery will begin in the second half but the speed and magnitude will depend on the policy response. We believe there is no upper bound, it added." So, what can we do to stop our economy falling into recession? Experts believe that the government can spend the equivalent of $18 billion if it increases fiscal deficit by just 1% of GDP. That would be less than 10% of what is required because, "Mumbai: Pegging the cost of the COVID-19 lockdown at USD 120 billion (approximately Rs 9 lakh crore) or 4 percent of the GDP, analysts on Wednesday sharply cut their growth estimates and stressed on the need to announce an economic package." Care Ratings has predicted a daily loss of Rs 350-400 billion which adds up to a total of Rs 6.3-7.2 trillion. Seems unfair that the US, with an estimated population of 331 million can spend a 1,000 times more than what we can spend with a population of 1.3 billion. Especially since the US government has a debt of $22 trillion which is about 80% of GDP, while our government has a debt of about $1.9 trillion which is 67% of GDP. Governments raise money by selling bonds through their central banks but on Tuesday, "For half an hour after trading started, nobody bought or sold a bond on Reserve Bank of India's platform," wrote Sircar and Goyal. The benchmark 10-year yield has risen 33 basis points since falling to 5.99% in early March, which was the lowest in a decade." Whereas in the US, "Short-term government bills in the US are offering negative yields for the first time. The one-month and three-month Treasury bills dipped below zero Wednesday." The reason is that the dollar is the main currency of trade in the world and only the US can print dollars. If the Indian government prints rupees its value will plummet, pushing up the cost of imports and resulting in inflation. The rupee fell to its lowest level of 76 to the dollar. We own the printing press. But we can't use them.

Why worry? Take selfie with coronavirus.

"Hong Kong: Evidence of the devastation wreaked on the global economy by the coronavirus pandemic mounted on Tuesday as activity surveys for March from Australia and Japan showed record falls, with surveys in Europe and the United States expected to be just as dire," wrote Marius Zaharia. "Entire regions have been placed on lockdown and in some places soldiers are patrolling the streets to keep consumers and customers indoors, halting services and production and breaking down global supply chains. Mirroring the emptying of supermarket shelves around the world, indebted companies have rushed into money markets to hoard dollars, with a global shortage of greenback funding threatening to cripple firms from airlines to retailers." Both supply and demand are being hit. "Goldman Sachs has issued a grim forecast, predicting that US gross domestic product (GDP) will plummet by 24 percent in the second quarter of this year, by far the largest drop since detailed records have been kept." Ray Dalio, founder of hedge fund Bridgewater Associates estimates that US corporations will lose $4 trillion and companies worldwide will lose a staggering $12 trillion. "Constituting less than 5 percent of the world's population, Americans generate and earn more than 20 percent of the world's total income." Total retail sales in the US, excluding automobiles, gasoline and restaurant sales, exceeded $5 trillion in 2017. If the coronavirus outbreak is not controlled by May, "The early estimates suggest that the global economy will contract by about 5 percent," said Ruchir Sharma. Despite pessimism by experts, President Donald Trump wants to reopen the economy by Easter which is just 2 weeks away. Good Friday is on 10 April. "We will assess at that time and give it more time if we need a little more time. We have to open this country up," he said. The great influenza pandemic of 1918 reduced global GDP by about 6% and consumption by 8%. Many have predicted that a rush to open US businesses could result in a sharp rise in mortality. Trump also wants trials on a combination of the anti-malarial drug chloroquin and the common antibiotic azithromycin because of anecdotal reports of benefits in patients with coronavirus. Again experts have ridiculed him. Why? It should be relatively simple and quick to carry out trials. To date over 422,000 have been infected so sample size should not be a problem. Earlier cases were treated symptomatically and extensive statistical data are already available so there is no need for placebo control. Patients can be randomized into those receiving chloroquin plus various antibiotics and those receiving cholroquin plus anti-retroviral drugs. Presence or absence of benefits should be apparent within a week. Amid all this gloom some are very optimistic. 6 Pakistani officials have been suspended for taking selfie with an infected colleague. Thank you Pakistan. 

Not easy when you have to worry about foreigners.

"Poor cash flows, rising leverage, and stretched valuations of of firms had analysts worried about an impending global recession last year. But no one guessed that a micro-organism could be the trigger for a global financial shock," wrote Bhatia and Bhattacharya. As the country gradually goes into a shutdown, earnings will fall and people will cut spending, both because shops and malls are closed and because they will be fearful of spending. This will affect both direct and indirect tax collections, limiting the amount of stimulus the government can provide. On the other hand, the price of crude oil has fallen dramatically which will save enormous money for the government. West Texas Intermediate has fallen from over $60 a barrel at the beginning of the year to around $25 per barrel today. "For every dollar the price of oil drops, India saves approximately $1.5 billion, according to Akhil Bery, an analyst at political risk consultancy Eurasia Group." But, though the government gains in foreign currency saved, consumers in India will not see a fall in prices at the pump because the rupee has fallen to below 76 to the dollar for the first time ever. Also, the government was quick to increase excise duty on petrol and diesel by Rs 3 per liter to rake in higher revenues. "Growth may weaken to 3% in the first three months of this year from 4.3% estimated previously, according to Oxford Economics, while Jeffries sees room for the government to spend $18 billion to support activity," wrote Anirban Nag. This will increase fiscal deficit for the next financial year from 3.5%, as predicted in the budget, to 4.5%. However, the IMF says that India's fiscal deficit is second highest among emerging market (EM) nations. "According to 2019 estimates from the International Monetary Fund (IMF), India's fiscal deficit (standing at 7.5% of GDP) is the joint highest among the cohort (along with Brazil) and significantly higher than the EM average (3% of GDP). Unlike the Budget 2020 fiscal deficit estimate (3.8% in 2019-20), which captures fiscal deficit of the union government, the IMF's fiscal deficit definition includes the financial position of all levels of government within a country (center, state and local governments)," wrote Surbhi Bhatia. The government has already spent 128.5% of its budgeted expenditure for the year between April 2019 and January 2020. So far, foreign investors have sold Indian equities worth Rs 1 trillion in March. The stock market index the Sensex has dropped from 40,723 at close on 31 January. It fell 13.15% to close at 25,981 yesterday. If fiscal deficit zooms up our credit rating maybe cut, which will result in a massive sell out of Indian stocks and bonds and the rupee will plummet as foreign investors take money home. The proverbial rock and a hard place.

Italy is suffering for being woke. Shouldn't we learn?

Responding to a call for 'janata (public) curfew' by Prime Minister Narendra Modi, India went into an almost complete shutdown yesterday. Since it was a Sunday, and everything was closed anyway, people stayed at home. Delhi Chief Minister Arvind Kejriwal announced a lockdown of Delhi with borders closed to interstate traffic, except for essential services. All shops, offices, religious services and Delhi metro are to stop. Malls, cinemas, markets and restaurants were already shut down. Banks will run with skeleton staff and groceries, shops selling fruits and vegetables, pharmacies, petrol pumps and home deliveries to will continue to function. Bengal Chief Minister Mamata Banerjee was furious with Indian Railways for allowing workers, who had migrated to other cities looking for work, to return without screening at stations. Railways is canceling all passenger trains till 31 March in an attempt to localise infections. However,  when the news got out, thousands of panicked people in Mumbai rushed to station, completely overwhelming railway officials and security personnel, and packed into trains to get back to their homes in other states, completely oblivious to the danger of catching the virus from such close proximity over days. "Ram Sagar Mistri, 32, a native of Danapur in Bihar, said people like him depend on daily wages. 'Once we stop getting work, it is not possible for us to survive more than a week in Mumbai,' he said." "Due to the sudden surge, we plan to run 14 special trains on Friday and Saturday from Mumbai and Pune. Out of these 14, nine will be to UP, Bihar and West Bengal," said CR (Central Railway) chief PRO Shivaji Sutar. That is India's unique problem in a nutshell. The world's largest population of very poor people. "More than 90% of the country's workforce is estimated to be in the informal sector. The Economic Survey of 2017-18 had said that 87% of the firms in the country, representing 21% of total turnover, are purely informal, outside both the tax and social security nets." Other countries are enforcing home quarantine, telling those who have had contact with anyone testing positive for the coronavirus, to stay at home. But that would almost impossible in India. "The largest chunk of Indian houses have only one room which is followed by two room houses. Together, these two types of houses comprise 69% of total houses in the country or 170 million households." "Also, there are about 10 million households that do not have any exclusive room for living as the room in which they live is also used as a shop or office." About 400,000 people die every year of tuberculosis in India, 200,000 die of diarrhea and pneumonia, 150,000 die of traffic accidents and 10,000 are electrocuted to death, wrote TK Arun. If only 5% of patients infected with coronavirus need intensive care (ICU), why not allow it to spread? Because, the rich will take all ICU beds and only the poor will die. Arun recommends increasing healthcare facilities. That's as silly like hugging Chinese, as the Italians did. The only answer is to reduce population by 80%. Woke solutions will not suffice.

We are missing all the interesting news.

After the WHO declared the coronavirus outbreak to be a pandemic the whole world seems to have taken a timeout and nothing seems to be happening except fighting the unseen virus with whatever is available. In the US, there has been a massive rise in the sale of firearms and ammunition. "Over the past week, gun stores countrywide have seen long lines and a wiping out of inventory as unnerved customers turn to their Second Amendment rights in the bid for self protection." How cute! Americans want to shoot at invisible virus particles. "There has been an uptick in inquiries for firearms training as families seek guidance on the selection, use and storage of a new firearm," Robin Sandoval, 45, executive director of the Austin-based 'A Gun and Gun Women's Shooting League' told Fox News. "Law-abiding Americans want to have access to firearms during times of uncertainty." Perhaps Gun Women in the US have seen women fighting over toilet paper in Australia and men armed with knives looting hundreds of rolls of toilet paper in Hong Kong. Turkey has closed its land border with Greece and Bulgaria. This is enormously ironic because earlier Turkey opened its borders so that Syrian migrants could enter into European Union (EU) territory through Greece. This was in an effort to blackmail the EU to support it in its fight against the Russian-backed Syrian government troops in the province of Idlib. Greece closed its borders, vowing not to let any migrant into its territory. There are allegations of Greek police using live ammunition against migrants, denied by Greece. Turkish President Recep Tayyip Erdogan compared the Greeks to Nazis,, which was condemned by Israel. When Syrian government forces started defeating rebels, linked to Al Qaeda and ISIS, in Idlib province, Turkey sent its troops and tanks to support them. When 33 Turkish soldiers were killed by Syrian government forces, Turkey claimed to have killed 309 Syrian soldiers in retaliation. In early March, Erdogan and President Putin of Russia agreed a ceasefire and joint patrols of Turkish and Russian troops to keep the peace. In recent weeks the same rebel forces have been hitting Turkish forces and Turkey has been retaliating against them. Meanwhile, North Korea, sandwiched between China and South Korea, is free from the virus. "Not one novel coronavirus case has emerged," Song In Bom, and official from North Korea's emergency health committee said last month in the official Rodong Sinmun newspaper. To show its missiles are virus free it fired two short-range ballistic missiles into the Sea of Japan. Trump has offered to help with virus control but Kim Jong Un can't accept because their is no virus. He should know the Gun Women of the US are ready if he should try any tricks. We are missing the interesting news because of the virus. 

Panic is from fear. But not of the virus.

"Prime Minister Narendra Modi on Thursday rallies the nation for the fight against coronavirus, calling on citizens to observe a 'janata curfew' by staying indoors on Sunday between 7 am and 9 pm as an expression of resolve to emphasise the need to reduce public interaction to the very minimum." "The PM also assured citizens that there would not be any shortage of essential items like food, milk, medicines and urged people to not resort to panic buying." That is exactly what happened. "The coronavirus scare had led to panic buying in  the past few days but on Thursday local markets across the capital witnessed a rare frenzy. Anxious people were propelled by rumours of markets closing down and the spectre of shortages crowded grocery shops and pharmacies. Ignoring clarifications by the Government and traders' associations that there was no shortage, they bought in bulk." I was looted, said a tired shopkeeper with a big smile on his face. Why don't people believe Modi? Firstly, because there are shortages. "One of the biggest challenges healthcare workers are facing in dealing with the Covid-19 outbreak is shortage of hand sanitisers and protective equipment, such as masks."  Even at the premier teaching hospital AIIMS, Dr Purva Mathur, professor of laboratory medicine at the hospital is preparing large amounts of sanitiser by mixing "Ethanol, Hydrogen peroxide, Glycerol and distilled water that are easily available in the market and the process of mixing them is clearly laid out by World Health Organisation". Secondly, Modi is not the only one with absolute power over our lives. Delhi also has a state government, with Arvind Kejriwal as Chief Minister, and politicians do not like to be seen to be second. The Delhi government has shut all malls, schools, cinema halls and restaurants. All markets will remain closed for three days, starting today. "The markets in Delhi will remain closed on 21, 22 and 23 March," a release from Confederation of All India Traders said. "In Maharashtra, authorities invoked the Epidemic Diseases Act on Friday to shut down corporate offices and impose a fine of Rs 1,000 for spitting in public in major cities of the state." "The 1897 law, introduced by the British to combat Bubonic Plague, has been described as the most draconian colonial legislation. It gives full protection to authorities for any action taken, with a provision that says, 'No suit or legal proceeding shall lie against any person for anything done in or in good faith intended to be done under this Act." Modi is remembered for suddenly extinguishing all Rs 1,000 and Rs 500 banknotes on a whim in 2016, when citizens had to queue for hours to withdraw own money from banks, and for forcing everyone to provide fingerprints and iris scans by saying it was for providing services. It is being used to trace and harass taxpayers. People know that, like the British, our elected masters have complete control over us. We fear them. Hence the panic buying. 

We'll be growing when others are falling.

"As rising infections of the novel coronavirus pose a medical and economic challenge for policymakers worldwide, global investors raced to stock up on cash, dumping even safe haven assets such as gold and government bonds." Cash means the US dollar. "Dramatic action from policymakers failed to bring much calm to financial markets on Thursday, with stocks in Asia sinking while European and US indexes were mixed. The only clear winner was the US dollar, which has surged as investors scrambled for cash."  "The strong US dollar is slamming global capital markets like a sledgehammer today," wrote Stephen Innes, global chief market strategist at Axicorp. Central banks in emerging markets are having to sell dollars to support their currencies while there is greater demand for the currency from their banks. "That merely signals more [US dollar] strength to come as the buying frenzy continues," said Innes. "Economists are already pencilling in a US recession in 2020, and are also not ruling out a recession in other parts of the world." "In the United States, the Trump administration could issue $1,000 checks to all Americans. UK Prime Minister Boris Johnson said Wednesday that a temporary roll out of universal basic income is under consideration. And Japan's government is reportedly weighing handouts of at least 12,000 yen ($109) per person." "Hong Kong said in late February that it would give 10,000 Hong Kong dollars ($1,288) to all permanent residents who are at least 18 years old. Australia said last week that it would pay 750 Australian dollars ($434) to pensioners and others who receive income assistance." This is in addition to actions by central banks. The Federal Reserve reduced its funds rate to 0 to 0.25% and promised quantitative easing worth $700 billion. The Bank of England slashed interest rate to its lowest ever level at 0.1% and promised to buy government and corporate bonds worth 200 billion pounds to provide more money to banks. So what is the second largest economy in the world, the Eurozone, doing to stimulate its economy? Precious little, it seems. Economic growth in the Eurozone has been anemic since the financial crash of 2008, growing just 0.1% in the last quarter of 2019. The European Central Bank is to spend 750 billion euros to buy bonds to infuse more liquidity into banks. But, monetary policy alone will not suffice. As other nations have showed Europe needs more fiscal spending. Germany, the largest economy, is to spend 550 billion euros to support companies so that they are not forced to lay off workers. "This is the bazooka," said Finance Minister Olaf Scholz. However, this attempts to protect German jobs but does not help the entire Eurozone. "For more than 10 years, four German governments led by Merkel have preached the virtues of austerity in the Eurozone." This is because of an obsession with 'Schwarze Null', which means 'black zero', signifying a balanced budget. In all this mayhem, what about India? S&P says that growth will fall to 5.2% in 2020. When others are contracting. India rocks.   

The fundament of the economy is in danger of falling out.

"The Supreme Court today came down heavily on the government for suggesting reassessment of the huge dues owed by telecom companies -- called adjusted gross revenues (AGR) -- and saying the entire country was being misled." This was in response to an appeal filed by the government asking the court to allow the companies to pay their AGR dues over 20 years at 8% interest "fearing bankruptcy in the industry if the court's order for immediate payment is enforced". "Any immediate adverse impact on the functioning of telcos will hurt not just the economy, but also the interest of crores of customers," said the telecom department. In response the court said, "The government fought tooth and nail and suggested penalty during arguments earlier." "Are we fools? How is this not sheer contempt?" asked the furious judges. When the telecom sector was liberalised, telecom companies were required to pay licence fees in accordance with the Indian Telegraph Act of 1885. This was enacted by the British who also enacted the Sedition law in 1860. Since the licence fees were too high companies often defaulted  on their payments, so the previous BJP-led NDA government introduced the National Telecom Policy in 1999, under which telecom companies are required to pay a certain percent of their gross earnings. The problem is that an earlier government wanted a slice of earnings from non-telecom business and in 2007-08 the Congress-led UPA government went to court. Prime Minister Narendra Modi accuses the Congress Party of being most corrupt so he could have shown himself to be different from the Congress by reaching an out-of-court settlement with the companies allowing them to stagger their payments. But he didn't, probably believing the fictitious economic growth figures of 7-8% calculated by his minions. Indeed, in August 2019 the Department of Telecommunications (DoT) levied a fine of Rs 30.50 billion on the companies and appealed to the court to ask the companies to pay Rs 926.41 billion. In October last year the Supreme Court delivered its judgement in favor of the DoT and asked the companies to pay Rs 1.3 trillion within a period of 3 months. The GDP growth rate fell to 4.5% in the second quarter of last year and unemployment rate rose to over 7%. The companies appealed for relief to the Supreme Court but were savaged by the court in February 2020 and threatened with jail term for contempt. "If India is to become the sort of entrepreneurial superstar that its government hopes it will, then the telecom sector is obviously going to be central to that plan," wrote Mihir Sharma. India is in real danger of being trapped in a low middle-income trap, wrote Anees Soz. Then came the coronavirus. No matter. The fundamentals of the Indian economy are  strong, said Modi. Thank God. We thought that the fundament had dropped out. 

Fiscal spending will give more money to people.

After gyrating up and down during October of 1929 the Dow Jones Industrial Average (DJIA) took three years to reach bottom in 1932, wrote Prof VA Nageswaran. This was during the Great Depression. With the coronavirus shutting down major economies of the world there is great worry that the world could face a severe recession like the Great Depression unless coordinated massive stimulus measures are taken by governments. The biggest danger is not the "overall global debt/gross domestic product (GDP) ratio of 322%" but that, "From 2007's final quarter to 2019's third quarter, the outstandings of US corporate bonds plummeted from $1.882 trillion to $563 billion for Aaa/Aa, while advancing from $1.313 trillion to $2.652 trillion for single A and from $997 billion to $2.714 trillion for Baa," wrote Nageswaran. Which means more money in junk bonds because they pay higher interest. Nageswaran has been warning against bubbles in stocks and bonds caused by low interest rates and quantitative easing by major central banks in the world. They have done it again. The Federal Reserve in the US announced an emergency cut in its funds rate by 50 basis points on 3 March. This alarmed markets so that the DJIA closed 2.9% down on the day. Then, in another emergency move on Sunday 15 March the Fed slashed funds rate by 100 basis points, taking it to zero lower bound once again, and announcing a $700 billion quantitative easing program. This spooked markets again so that the S&P 500 closed down nearly 12% and the DJIA fell a record 12.9%. In an emergency move, the Bank of England cut its interest rate by 50 basis points to 0.25%. Markets were not impressed because lowering the cost of borrowing is of no use because companies will not invest in new business when there is no demand, as people are restricted by lockdowns, and banks will not lend to small businesses which are not allowed to open. Everything changed yesterday. President Donald Trump wants to send checks to families in the US and wants the Congress to sanction "$200 billion-plus of payments to Americans by early April". The Trump administration also wants a stimulus package of $850 billion. "Roughly $500 billion of this would be tied to a payroll tax cut, while $250 billion would come in the form of Small Business Administration loans and another $58 billion would be directed to the airline industry, among other measures." The British government announced a stimulus package worth 330 billion pounds, equal to 15% of GDP according to the Chancellor of the Exchequer Rishi Sunak. This will help small businesses and individuals to survive while they are unable earn. The Dow Jones reacted by jumping over 1,000 points. The Reserve Bank of India (RBI) did not cut interest rate at its last meeting because the rupee may tank if carry trade comes to a halt and our fiscal deficit is already among the highest among emerging market countries. We can only wash our hands and pray. 

We're unique.Normal rules do not apply.

The trade war between China and the US, and the coronavirus have led many companies to diversify away from China, hence, "For India, this raises the possibility of a silver lining amid the turmoil -- that companies diversify their supply bases and invest in India," wrote Nikita Kwatra. "However, trade experts fear that India's growing protectionist tendencies could get in the way. The past three Union budgets have seen the country raise import barriers in a bid to protect domestic industries." "India's rising tariff walls and lack of integration into global production chains are probably the reason why its share in world merchandise exports has largely remained stagnant in a 1.6-1.7% range since 2011." Germany exported goods worth $1.56 trillion in 2018 according to the World Bank, compared to India. which exported a little over $322 billion. India is not like any other country in the world. Like the US, India is dependent on domestic consumption which accounts for 60% of GDP but is growing weakly at present. Domestic consumption contributes 68% to the US economy, which is the largest importer and the second largest exporter in the world. Exports should account for 30% of India's GDP, said World Bank economist Hans Timmer but it is only 10% at present. According to the International Monetary Fund (IMF), India was the number five economy in the world in 2019, behind the US, China, Japan and Germany, but ahead of the UK and France. However, the population of India stands at 1,376 million, whereas the UK has a total population of about 68 million and the population of France is just over 65 million. Which means that per capita GDP of France at $$41,760 and UK at $41,030 are much higher than India's at $2,171. China's total population is nearly the same as that of India's but it enforced a one-child policy in 1979 which resulted in 400 million fewer births, allowing women to join the workforce, resulted in better health of women, and better education and health of children. The adverse effects were brutal enforcement, there was selection in favor of boys and the population is ageing. According to the UNICEF, India had the largest number of births on 1 January 2020, with 67,385 births. By the end of the century, India will be exploding with the world's highest population at 1.5 billion. Exports rose 2.9% to $37.5 billion in February, while imports rose 2.5% so that trade deficit was lower at $9.7 billion. Commerce Minister Piyush Goyal expressed pride. We are proud of a small achievements. We are unique.            

Move away from danger. That's the only remedy.

The panic created by the coronavirus pandemic is worrying as there is "evidence that stress is building to dangerous levels in crucial arteries of the financial system", as "Bankers, companies and individual investors are dashing to stock up on cash and other assets considered safe in a downturn to ride out the chaos." The key concern is liquidity. "Investors are having trouble buying and selling US Treasuries, considered the safest of all assets." "Funding in US dollars, the world's most traded currency, is getting harder to obtain." If liquidity becomes a problem companies may find it harder to pay their debt. "Companies have spent the years since the global financial crisis binging on debt," wrote Juila Horowitz. "Corporate debt among non-banks exploded to $75 trillion at the end of 2019, up from $48 trillion at the end of 2009, according to the Institute of International Finance." Some experts, like Prof VA Nageswaran has been warning about asset price bubbles for some time but it took a virus to pierce the bubble. "Mounting debts have hit Chinese companies struggling to pay workers and suppliers amid the coronavirus outbreak." "The government has asked banks to offer more credit for an economy stunned as the virus spreads rapidly. But a survey of small and medium Chinese firms found millions on the verge of collapse." "For years, wonks bearing spreadsheets have warned that corporations around the planet were developing a dangerous addiction to debt," wrote Peter S Goodman. "Interest rates were so low that borrowing money was essentially free, enticing companies to avail themselves with abandon." Last year, Denmark's third largest bank was offering customers a "10-year fixed rate mortgage with an interest rate of -0,5%", which meant that customers would have to pay back less than they borrowed. Something bad was bound to happen and it maybe happening now. "The coronavirus outbreak could cost the global economy up to USD 2 trillion this year, the UN's trade and development agency said, warning that the shock from the epidemic will cause a recession in some countries and depress global growth to below 2.5 percent." "If consumers cut consumption by no more than 5% to avoid infection, that will suffice for a world recession,"  wrote SA Aiyer. A recession is two quarters of negative growth. "Corporate debts have stayed high after 2008, so the global and Indian financial systems are again in danger, even as they struggle to throw off the bad loans and mega losses of the past." Vaccines protect against viruses and the only vaccine is to diversify away from China completely as they will continue to eat exotic animals and will remain a danger to the world forever. Otherwise, we will be reading similar articles in future.

So many ministers to minister to us.

New Chancellor of the Exchequer in Britain Rishi Sunak unveiled his first budget earlier this week, in which he sought to mitigate the effects of the coronavirus on the economy. He has raised the threshold on National Insurance, which is a tax on earnings to finance social spending, statutory sick pay for those advised to self-isolate, fuel duty to be frozen for the 10th consecutive year, a cash grant for small businesses and "More than 600 billion pounds is set to be spent on roads, rail, broadband and housing by the middle of 2025." "Beside him, the Prime Minister beamed like a doggy handler whose prized pup had just won best in show," wrote Henry Deedes. What a difference from India! Any journalist daring to call the prime minister a "doggy handler" would be beaten up and put in prison on sedition charges, written into law by Lord Macaulay in 1870. Whereas, Sunak has kept tax on fuel unchanged despite the price of crude oil falling by 25%, the government in India promptly jacked up excise duty by Rs 3 per liter to squeeze an extra Rs 390 billion from consumers. The Bank of England slashed interest rate by 50 basis points to 0.25%, reducing borrowing costs and perhaps to weaken the pound to increase exports. The Reserve Bank of India (RBI) spent an estimated $1.5 billion to support a falling rupee because a weak rupee increases the price of imports, especially oil, and adds to inflation. Inflation is predicted to be 1.4% this year in Britain and 1.8% in 2021-22, whereas in India retail inflation came in a 6.58% in February, compared to 7.59% in January. The RBI kept the interest rate unchanged at 5.15% in its last meeting but increased liquidity in banks by cutting the cash reserve ratio. The Governor of the Bank of England Mike Carney has a degree in economics and served as Governor of Bank of Canada, whereas the Governor of RBI Shaktikanta Das is a retired IAS officer with a masters in history. By reducing National Insurance contribution and announcing statutory sick pay Sunak supports the working middle class. In India Dearness Allowance was increased by 4%, from 17% to 21%, for government employees, while increasing the goods and services tax (GST) rate on mobile phones from 12% to 18%. "The central government in India has far too many ministries," wrote Prof Avind Panagariya. India has a whopping 53 ministries compared to Germany with 13 and France with 16. This means, not only a lot of politicians with eye-watering perks, but associated civil servants whose perks would make Bill Gates jealous. While Sunak is trying to revive the British economy ours is strangulated by the government. No wonder unemployment rate has risen to 7.78%. With so many ministers to minister to us.

India has no gender bias in oppression.

"On 6 March crude oil prices crashed big time," as "The price of Brent Crude (one of the main benchmarks for oil prices) has fallen from close to $52 per barrel on 6 March to $31.49 per barrel on 8 March," wrote Vivek Kaul. The government will save a lot of money. "Between April 2019 and January 2020, India had imported 188.4 million tonnes of crude and paid $87.7 billion for it. The average price for India's basket of crude has dropped from $64 to $34.52. But, what about consumer? In May 2014, when crude oil cost $106.85 per barrel, "The price of petrol in Delhi then was Rs 71.41 per liter," while on 1 March 2020 it was Rs 71.71 per liter when the price of crude had dropped to $50 per barrel. Because of taxes. This means we are paying 118% more than the dealer price of Rs 32.93 per liter. "The Vice President of India, Shree M Venkaiah Naidu has said that every citizen must consider it as his sacred duty to pay taxes as development and welfare measures would suffer if governments do not get adequate revenues." Welfare means a whole list of social schemes, ostensibly to help the poor, but in reality to help politicians. Like the farmers' loan waiver which was promised to win assembly election in UP, and Rs 6,000 for every farmer which was promised to win general election in May last year. This government is very conscious of duties of citizens and it will shoot to kill to ensure that we abide by our duties. Alarmingly, "The Union budget for 2020-21 took a bold step to enshrine taxpayer rights through a 'taxpayer charter' in India's income tax statute," wrote Dash and Kaur. It should be modeled on the US Taxpayer Bill of Rights (TBOR) which has set up a Taxpayer Advocate Service "which protects taxpayer rights and ensures accountability of tax authorities". This government does not believe in any accountability for itself. For instance, while Prime Minister Narendra Modi believes that professionals, like "big doctors, lawyers, chartered accountants etc" are cheating on their income tax payments he has no hesitation in giving tickets to criminals guilty of heinous crimes to win power in UP. To protect our most sensitive data, including medical records, the data protection bill has strict punishment for companies for violating confidentiality but says, "All or any of the provisions of this Act shall not apply to any agency of the Government in respect of processing of such personal data." Like China, the government has set up face recognition technology without any discussion. "We are using face recognition software to identify people behind the violence. We have also fed Aadhaar and driving licence data into this software, which has identified 1,100 people." said Home Minister Amit Shah in parliament. Earlier, we were assured that the police cannot access biometric data on Aadhaar. "Scholars of India's political history will see strong similarities between the position of the BJP today and the Congress of the late 1960s and early 1970s," wrote Neelanjan Sircar. Sycophancy in Congress led to Indira Gandhi's emergency which led to mass arrests of opponents. Indira Gandhi was a woman, Modi is a man. No gender bias in oppression in India.

India maybe forced to catch the falling knife.

"I have a sneaking suspicion that doomsayers, especially the well-meaning ones, are in a state of wishful thinking, and would actually like a full-blown international macroeconomic crisis as in 1991; For, they believe, that is what will take to jump-start serious economic reforms," wrote Prof Vivek Dahejia. "However, in my judgement, these well-wishers, hoping for a crisis, are going to be disappointed." Hard to imagine that this article was written on 9 March, the day on which the Dow Jones Industrial average fell 2,000 points, only to be outdone by a 2,300 points or 10% crash yesterday,  "triggering thresholds that paused market activity on the floor of the New York Stock Exchange in pre-market trading and immediately after opening bell", wrote Lucy Bayly. "It was the worst point drop ever for the Dow and its worst performance since the market crash in 1987." "As the expression goes on Wall Street, nobody wants to try to catch a falling knife," wrote Steven Pearlstein. "But it's even worse than that when most of these stocks, bonds and derivatives have been purchased with borrowed money. The wiseguys who now dominate the daily trading on Wall Street -- hedge funds and private equity funds -- typically put down $1 or $2 of their own and their investors' money for every $10 worth of securities they purchase." As prices fall lenders sell off stocks to get their money back, leading to a vicious cycle of falling prices, more selling, leading to more falls. India's economy was slowing down even before the global crisis due to the coronavirus. Private consumption expenditure, which contributes about 60% of the gross domestic product (GDP), sales of cars and two-wheelers, number of airline and train passengers and tax collections are all down, wrote Vivek Kaul. "While the rate of growth is the slowest in over six years", "What is truly unnerving is that the Q1 and Q2 numbers of the current year have been revised dramatically, and, what is worse, they have been revised out of turn," wrote Latha Venkatesh. This government is known for its proficiency in cooking data to conceal its economic failures. Union Minister for Women and Child Development Smriti Irani wants global agencies to "set the India story right, and in proper context". The minister should be concerned that the labor force participation rate for women is dropping and large numbers are still dropping out of school to do domestic chores. "The Indian economy will continue to muddle along for the foreseeable future, neither doing brilliantly well nor doing disastrously poorly," wrote Dehejia. We missed the upside because of poor policies, the downside may not be in our hands. We maybe forced to catch the falling knife.

Hunter Biden's job would be corruption even in India.

"The Dow Jones Industrial average fell into bear market territory Wednesday, and some analysts see a decline of another 10% or more before the selling subsides," wrote Patti Domm. "The Dow has lost 20.3% on an intra-day basis since Feb 12 and a little more than 20% on a closing basis. A 20% decline is considered bear market territory." Exactly one month back, on 12 February the Dow hit a record closing high of 29,551.42. President Donald Trump frequently associated the rise in stock prices as a reflection of his good economic policies so the media has been quick to taunt him for the fall. Bloomberg calculates the possibility of a recession in the US at 53%. "The chance of a recession within the next year now stands at 53%, the highest reading since the US exited the Great Recession in June 2009 and significantly higher than the 24% seen in the prior month." The global economy is suffering a supply side problem as factories shut down to restrict workers from traveling and a demand side problem as people stop buying as earnings drop, wrote Matthew Yglesias. Prices of commodities, such as oil and wheat have fallen and investors are parking their money in bonds of 'safe governments'. "The interest rate on a 10-year US government bond has fallen to below 1 percent. A German 10-year bond carries an interest rate of negative 0.87 percent." This must be sweet music to the ears of Joe Biden who is now almost certain to be nominated as the candidate of the Democratic Party to take on Trump in the presidential election on 3 November. Left wing candidate Bernie Sanders did very well in early primaries but after South Carolina Biden pulled ahead and after super Tuesday Biden has all but ensured his nomination. The reason for Biden's surge is that the Democratic establishment ganged up against Sanders. The swamp absolutely does not want to be drained. When asked, Sanders said, " Look, it is no secret -- The Washington Post has 16 articles a day on this -- there is a massive effort to stop Bernie Sanders." "The corporate establishment is coming together, the political establishment is coming together, and they will do anything and everything. They are really nervous that working people are standing up." Is Biden a certainty in November? His son Hunter Biden is still a question mark. "Back in 2014 after a regime change in Ukraine, Hunter Biden joined the board of a scandal-plagued Ukrainian natural gas company named Burisma. Hunter had no apparent qualifications for the job except that his father was the vice president and involved in the Obama administration's Ukraine policy. He got paid $50,000 per month for the job..." That is a huge $600,000 a year. In India we call it crony capitalism and condemn it as highly corrupt. Apparently not the Democrats.