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|Posted on January 25, 2015 at 5:08 PM||comments (8)|
The Trillion Euro stimulus announced this afternoon by ECB President Mario Draghi is nothing less than magnificent in my view, and will help create jobs and industry for millions, and turn into wealth. This stimulus augurs well for the European stockmarkets and for the Euro itself, which it now underpins with a very positive aspect. It seems to have been announced at the right time, and although the immediate market reaction may not have been wildly enthusiastic, it is a complex stimulus, needing people to understand and digest its implications.
In plain terms, it is 60 billion Euros per month over 18 months, starting from March to September 2016, meaning a total of 1,080,000,000,000* Euros. This was announced by Mr Draghi at the press conference in Frankfurt this afternoon.
It will serve the 19 nations that make up the Euro Area, or Eurozone, which now includes as from 1st January 2015 Lithuania. However, it will not be available at the moment to Greece, which benefits from arrangements already in place from the IMF, which gave them two bailouts and numerous haircuts. Perhaps there could be cross border mergers of some organisations which would benefit all?
There seems enough appetite for additional funds, especially by companies who have not been able to find funding from the banks so far. This is a ready segment that will be glad to be served by this Stimulus. As in England and Britain, where Mr Cameron has been visiting various companies, who have received funding now, something similar needs to be implemented in the Eurozone. Money invested in companies which need capital for upgrades of machinery, or cash flow to keep the factories operating while their customers arrange to pay them, will maintain employment and sustain livelihoods and, hopefully, even create wealth in the long term. That 'old school' way of trading had died recently in the credit crunch, and could well do with revival. It may be the clue to bring Recovery back on stream.
This Trillion Euro Stimulus was long awaited, and probably is just in time, now joining the money flow in the U.S., Japan and China, to maintain the worldwide economic Recovery, which shall flourish to Prosperity for all nations. The next stage surely must be for the BRICS nations to reduce their benchmark interest rates and for the Emerging Markets to do something similar, in due course to be followed by Africa perhaps? Or even simultaneously, and soon? Why not? The national books can become squared internationally, as each nation develops its resources, trades with the other nations, and brings development and growth at home. Would that not be the most marvellous thing to happen?
I wish you peace and prosperity, to every nation, man, woman and child.
P.S. Earlier I left out three 0's. Aw aw aw!
|Posted on October 5, 2013 at 2:31 PM||comments (2)|
Hi everyone, how are you?
I wrote and published several blog posts over the last seven days, as follows :-
- Germany a good model of employment
- Forward guidance and the UK Housing market
- Light a candle....
- Stimulus? Taper? Where we headed?
- Mr Bernanke's penultimate testimony before he leaves the Fed.
- The paradox in inflation
- My blog posts this month
- Thanks for visiting my website.
- Bi-partisan Agreement or 14th Amendment, either way Debt Ceiling will be raised.
- Netherlands, Kansas City, Kharkov....welcome, welcome!
Over the 7 days, I note Referring Traffic to my website and blog (www.durudarshan.co.uk)
from the following. I express my thanks to the staff at these organisations, for listing my website and blog....without you, all these readers wouldn't have found me so easily. Thanks!
I am pleased to note that the value of my website is going up, and I am getting more visitors each month. I am particularly pleased to note that I rank tops with Google. That is thanks to my parents for having given me this unique name. (Duru is the North Star, and darshan means obeisance).
I hope you find something interesting to read on my website or blog. I like to tune in to receive any interesting information, most of which I share with my readers.
This morning, I went and helped clean the LDS Chapel here in Ilford. I opened the windows, then squirted some bleach into the toilet pans on all three floors. Whilst this was doing its job, I moved the chairs in the Sacrament Hall and hovered the carpet. Just nice and easy, and the exercise did me good. In the peace and quiet of physical labour, the mind becomes quiet and receives the Eurekas!
Until next time,
Wish you a great weekend.
|Posted on September 27, 2013 at 2:36 PM||comments (3)|
In his penultimate testimony recently, Federal Chief Ben Bernanke suggested that the QE measures had greatly helped the economy.
The infusion of money did indeed stabilise the economy and create jobs on an on-going monthly basis, helping people buy autos and houses, and adding to consumer confidence in the U.S., which has become one of the fastest recovering nations post the 2008-crash. The QE measures introduced in August 2011 helped to propel the economy from a negative loss of confidence to a positive full of hope and promise and enterprise culture. The QE measures helped to finance the government departments as well as the social net, and has got some of the pick-and-shovel jobs under way, although not as many as may have been envisaged.
Secretary for the Treasury Jack Lew is characterised as pleading for action on the issue of the debt ceiling, but of course this issue cannot have escaped anyone's attention. A logical time for resolution of this issue in somewhere mid to end October, when Mr Bernanke may be stepping down, having served his nation in a most admirable way.
The $40 billion a month stimulus under the first QE measure must have clocked up a trillion just after two years and one month. The additional stimulus of $45 billion a month in buying of mortgage-backed securities has been in place for nearly a year, and that tots up another half trillion or so. All told, the authorised stimulus which was the debt ceiling was around $1.45 trillion, plus a further $700 billion from banks and private or public concerns. The money has swirled in the system and created much happiness for so many people, and sustained livelihoods and restored confidence, not only in the USA, but around the world. The dark days were when diamond merchants in India were standing idle, because American men had stopped buying diamond rings for their fiancées. The whole supply chain from South Africa to Antwerp to Tel Aviv felt the effect. Thankfully, those days are gone, and we all have to thank the return to confidence that has enabled consumers believe in a good life and live with hope. When people have received loans and mortgages, their purpose has been filled with joy. May that continue for the foreseeable future, as hard work and enterprise turn into wealth, going round and serving more. A growing circle of enterprise and industry in each nation has given added confidence to increased trade as well as growth at home. When the global locomotive of growth drives along, it is music to the ears of people everywhere, be it China, India, the Middle East, Africa, or South America, not to forget Japan and Australia. Growth and enterprise is good for the world, as each nation trades their unique resources, creating work and purpose, confidence and enterprise.
The cash-flow that the stimulus measures provided have been a great blessing, creating many jobs, creating many livelihoods, helping many families survive and recover from the savage recession that beset the world, and with the creation of activity, opening of factories and workshops, improving purchase of goods both utilitarian and luxury, improved number of travellers and visitors globally, it seems the economies are set for further growth to Prosperity.
Secretary of Treasury Jack Lew and colleagues will know what measures are necessary. President Obama and House Speaker Boehner will ascertain what is necessary and prudent for continuation of the economic Recovery. Positive developments on this with bi-partisan co-operation will herald the path to Prosperity. Trusting in good judgement, no one should have concern.
|Posted on September 20, 2013 at 12:53 PM||comments (17)|
There are two types of inflation, shall we say, good inflation and bad inflation.
Good inflation is there when prices are going up due to continued increased demand.
Bad inflation is when the stocks are low, and are not being replenished, and the shortage
continues, and what is there is offered at a higher price, like onions in India.
In the 1930s, bad inflation took over the world, especially in Germany, with hyperinflation
and the printing of currency notes of high denominations and the usage of wheelbarrows to
carry the money to buy a loaf of bread. Such too was the situation in Zimbabwe not too long ago,
and there of course they did not even have wheelbarrows to carry the currency around. People
had to be trillionaires to buy a loaf of bread.
That shows an acute reaction to a model of currency issuance and control that leads to such a
grotesque situation. Where people can think and calculate and issue rationally, such a situation
ought not to arise.
In what was British India at that time, again in the 1930s, farmers stopped growing food because
it had to be sold at such high prices that people stopped buying as much as before. Farmers became
poor, unable to pay the rents on their plots or their housing. The zamindars could not collect their
rents, and consequently the whole system fell apart, the whole cycle of consumerism affected.
Such a situation causes bad inflation, where scarcity puts the prices up. Shortages are created,
together with the ills of hoarding, wastage while people go hungry and a disillusionment with production.
What was happening before the crash of 2008 and a hint of the 1930s in happening in India today.
Onions there are more expensive then the ones we buy in England, imported from the same region.
There is something quite wrong with the handling of the situation in India. I firmly believe the loosening of monetary policy and the reduction of the benchmark repo rate would have helped greatly.
That is the opinion of industrialists and that of bankers, but obviously not of the committee that decides such matters in the Reserve Bank of India. Today's hiking of the rate from 7.25 percent to 7.50
seems a step that will not help anybody.
With an increased money supply and lower interest rates, the Western economies have weathered the sceptre of a prolonged recession. By grace of God, with continuing production of crops and means to eat well, all other industries can do well also as consumerism gets a boost, a strengthening Recovery leading hopefully to a growing Prosperity.
Such should too be the case in India. Alas, if only they would listen and have faith. In such a burgeoning economy which has huge potential of further growth, they must have confidence of investment from abroad, even if they reduce the interest rate.
Today's interest rate hike indicates it was not welcomed by the financial markets. Clearly peoples' hopes have been dashed for the meantime. Hopefully, next month the situation may be more favourable.
|Posted on September 14, 2013 at 6:59 AM||comments (4)|
There is palpable renewed confidence in the UK economy since Mark Carney took over as Governor of the Bank of England. His forward guidance that the record low interest rate of 0.5 percent would hold until such time as unemployment falls to 7 percent implies a very stable environment in which people can borrow and grow their businesses and add to their property portfolios.
Some forecasters believe we are in for another three years of this very favourable environment of low interest rates, and this has been registered by the pick up in the housing market. The FTSE has seen healthy volatility and seems to wear a rosy glow.
Rising house prices are of course not favourable to everybody, as a lot of people become sidelined, unable to buy even their first house while those who are already on the ladder bask in the glory of ownership or further improve their wealth by remortgaging and investing in the Buy-to-Let market.
This is where the government can bring in some mechanism where priority should be given to First Time Buyers and Growing Families Who Need to Move to a Bigger Property. That would bring a lot of stability to the market, and ensure a bubble is not created, where some people and corporations may prosper for the meantime but would not be appropriate for the economy long term.
The London housing market registered a gain of 0.9 percent last month, one of the healthiest gains for some time. The availability of mortgages and especially re-mortgages at record low interest rates is the cause for the euphoria.
If a mechanism is introduced through legislation to favour first time buyers and big families as I have suggested above, maybe it will turn into a celebration for more and more people. The housing supply would help those in need, and curb the unnecessary speculation. Payment of ever-growing rents from the public purse to buy-to-let owners is merely dishing out national wealth to a small minority of people, whose tenants become dependent on the social security for their lifestyle.
The interest rate is at a record low in response to a need for the economy to pick up, as a stimulus, and wealth will only be created when money is employed to create additional enterprise. In this respect, the banks will be doing their job fine if they pro-actively start to lend money to businesses and entrepreneurs in each local community, thereby enabling people make a living, create jobs in the local economy, and generally give a boost to the whole economy. When people are purposeful and busy, they have to use transport, buy food outside, dress up well and even buy a few luxuries.
The future looks rosy.
|Posted on August 22, 2013 at 8:21 AM||comments (6)|
You know, there was a time when Twelve and a half Indian Rupees exchanged for a U.S. Dollar.
Today, the rate is 65 Rupees to the Dollar. Hardly a month ago, it was 55 Rupees.
For a country with U.S.$277 Billion in reserves, and a debt to GDP ratio of about 27 percent, this is
clearly selling the Indian Rupee too cheap.
What sort of policies have been in place that the currency has virtually fallen 400 percent against the greenback, in a period of less than two decades, when the growth in India has been quite healthy while the mature economies have structurally slowed down?
What is the purpose of encouraging foreign inflows of capital which periodically take flight and cause a panic in the markets?
Of course, with the Rupee at current levels, most overseas investors see this as a golden opportunity to invest in India. And the Finance Minister, Mr P. Chidambaram, has confirmed that inflows have been very healthy, and as it is absorbed into the system, a healthy picture will emerge. Growth for the 2nd half of this year is expected to be much improved, with exports increasing month on month.
Can't blame anyone for snapping up quality Indian goods at ridiculous prices, can you?
The Reserve Bank of India's repo rate of 7-1/2 percent is really responsible for the slight slowdown that Indian industry and consumerism have seen over the last year and a half. When the picture is so healthy, why should the RBI offer such a high rate to attract overseas investment? When compared to the mature economies, the differential is more than 5 percent and as much as Seven and a quarter percent. Is anyone listening? What is the logic of it? When India has enough for good growth, why does she need foreign inflows which periodically make the currency bleed?
The best announcement is that the RBI will not take any policy measures to try and curb the current and temporary fall of the Rupee to the absurd level.
On 5th September, the new Governor of the RBI will assume his office, and both Corporate India and the public wait with hope to see what path he follows to restore robust growth and much need relief for consumers in India. More people wish to buy houses and cars, take out loans for education and travel. India needs must add to the world economic growth story, and an orderly drop in the repo rate would prove the tonic.
|Posted on July 6, 2013 at 4:30 AM||comments (2)|
What else? It is wisdom from Wal-Mart chairman to wear a silly hat to lighten things up. A light mood, some light music as well, lightens up the atmosphere and makes people optimistic and believe in the future, as everyone should. If people learn from the past, live in the present, and look forward to the future with hope and rosy expectations, why, isn't it possible that that is precisely what we can bring into being?
Bob Proctor in his book, You Were Born Rich, says that an acorn has a blueprint to grow into an oak tree. When the acorn seed is planted, it develops roots and drinks up water (rather like a businessman drinks up the necessary knowledge to grow his business as he goes along). Then, when it shows its head above ground, all the necessary energy that allows it to grow into an oak tree comes to it. That is the natural law of attraction.
Milk is plentiful in some parts of the world, but people don't seem to buy as much milk as they used to before, because it has gone up a few pence in price. Compared to most other things, this nutritious and delicious drink is still one of the cheapest drinks available, and so wholesome. I don't see why some supermarkets in England charge £1.50 for 4 pints when the corner shop charges £1.10 or £1.20 while other supermarkets charge a £1.00 - for the same size. Couldn't they all try for some medium price, like £1.20 or £1.25, then all farmers, suppliers and distributors can make a fair living? The Drink a Pinta Milk a Day poster campaign of the 1970s/80s is something I remember, and I was often encouraged to buy a pint and drink it with a straw at the corner shops. What a delight!
So, as humanity and all living creatures (who humanity looks after) were born rich, it would be a sign of faith to believe in a bright future and yes, wear a silly hat and sing a song, and get some straws out and drink some milk or cream.
Wish you a happy Saturday and weekend.
|Posted on June 25, 2013 at 6:56 AM||comments (31)|
According to Reg Varney, the Fox news commentator, the world's central banks collectively have pumped in some Fifteen Trillion Dollars into the economies over the last few years. This is a hugely interesting figure...it should suggest the world is swimming in money, and not in need of further stimulus at all at all...
So far as publicly available figures indicate, the U.S. raised its Debt Ceiling by $2.15 Trillion Dollars on 3rd August 2011, and thereafter via QE 2 and QE 3 by a further $85 Billion a month, which has been trimmed by 1/12 since February 2013 since the Sequestration cuts kicked in.
In the United Kingdom, some £375 Billion of Credit Easing facilities have been introduced by the Bank of England, all told, till currently.
I wonder which other central banks have printed that gigantic amount of cash and released it into the system.
The current figures from Russia indicate a slow-down there, with GDP figures progressively being downwards, mainly due to lowering Oil prices on which the economy relies so heavily. Oil prices in the global context are of course likely to head down further, if recession is to be avoided once again.
The current oil stockpiles in the Middle East and the Strategic Oil Reserves would corroborate this scenario, and it can only help the oil exporting nations to keep the oil price low for some time till economies can pick up again.
To avert a slow-down at home which would impact the world, I believe the BRICS nations, with the exception of China, should consider a generous cut in the benchmark interest rate. I would suggest, that is the silver bullet, and they ought to utilise it.
China under the Rising Star of Chairman Xi is bound to do well and he likes progress and prosperity for his people; however, they are unlikely to keep on manufacturing goods cheaply and ship them out to the rest of the world, and on credit at that. A greater demand and consumerism in China itself is likely, and a re-focus is probably causing the current mild hiccup. It is a matter of record that when Honourable Xi was a rising star in his party, his comments and suggestions created a boom. I cannot believe that now he is in charge, anything but the best will be possible for China.
With increased trade between nations, and extension of credit facilities and investment into one another's cultures, a great hope of continuation of the world economic Recovery is always bright.
|Posted on May 29, 2013 at 4:29 PM||comments (3)|
I went for a long stroll this evening. Even after a light meal, I felt a bit heavy. Probably due to eating two boiled eggs yesterday (normally I seldom eat eggs).
Where previously they had restaurants with a bar which seldom had customers, now they have turned them into family restaurants, no alcohol, no smoking, just good food, and they seem to be doing well.
Others, a Turkish kebab house, is on a big scale, but still has a steady stream of customers, it seems to serve fresh well-cooked food and the prices are probably reasonable. Restaurants which people normally use when they celebrate also seem busy. When people eat out, they spend to a budget, but don't like going to places which look a bit too homely, cheap food just to fill the stomach; those establishments will have the occassional customer, but that is all.
When I read that in England people have been spending less on food over the last few months, that suggests people are becoming health-conscious and buying selectively, and probably also eating out a bit more, as the good restaurants being busy would suggest.
The current Recovery in the U.S. is being fueled by the quantitative easing and the record low interest rate. The housing market has started to pick up at last, although fewer houses are being built recently.
The Japanese quantitative easing has helped Japan turn around, with the Yen and Japanese goods becoming a bit more affordable. Coupled with the trend of Japanese investments overseas, this is certainly doing good to a lot of people. As China buys more Japanese bonds and currency, the whole region is promising good growth. Chinese newcasters and public figures seem to be sporting high-end European and American brands in attire, which creates balance in trade and fulfills peoples' taste.
Here in Ilford, shops which were too large are being converted into smaller shops, and people are putting good fitments and creating neat, attractive parades. It probably remains for the Bank of England Guvnor to pump some additional credit and quantitative easing into the system to create a boom, which would be a great blessing and bring the normally happy atmosphere of peace and plenty.
On Thursday I pray the MPC members will give Sir Mervyn King a supportive vote to do the necessary
That's about it, except to mention that the Oil price is still quite high. A lowering of $10 per barrel in the context of 30m b/d would be okay for most of the OPEC members, and as the rest of the world motors ahead, so can the OPEC economies continue to develop their infrastructure projects.
|Posted on May 23, 2013 at 5:33 AM||comments (6)|
The I.M.F. has a good suggestion for Britain : to inject some capital into infrastructure projects. That would of course create or maintain lots of jobs, as well as upgrading the infrastructure.
There may be a good argument to bring forward the house-building at the racecourses, refurbishing houses in the deserted towns in the regions, and perhaps assisting people to move away from the main areas and into these new areas, which could create a lot of economic activity as well as giving people better housing, jobs (in a new town you would need doctors, nurses, cinema ushers, porters, teachers, traffic wardens, salespeople, double-glazing companies, solar panel engineers, builders, drivers, electricians).
The shale cracking or fracking industry could be a viable alternative, once safety concerns have been ascertained, creating jobs, lowering energy bills, making Britain an affordable place to live in, and attracting more people to consider making Britain their home if they are suitably qualified to add to the economic life here.
The lending requirements in the housing sector are of the order of a £100 billion, and yet Bank of England Guvnor Sir Merwyn King is only backed by 2 of the 9 MPC members for an additional stimulus of £25 billion. The other seven would probably like to keep Austerity measures, the snake that is squeezing life out of the European economies. As the IMF has suggested, growth would be the alternative, and a stimulus is the required cash flow mechanism that must be utilized. The U.S. quantitative easing policy has shown that it is a practical way to come out of recession, and both the U.S. and Britain are blessed in this regard in that they can issue their own legal tender. The MPC board members can hopefully see the sense of it, and give Sir Merwyn the vote to issue a further stimulus before he retires. It will be a blessing to the nation, and in time for the royal birth in June.
What should we have instead of Austerity? Well, of course, a jamboree and a celebration would be good, which will help people satisfy their reasonable demands of a growing prosperity. The quicker it is put in place, the earlier the cycle of wealth creation can continue, which in turn will bring money to address the deficit, and the only really practical way of growth. Can you imagine a shop-keeper without cash flow? Nor should the MPC board members see Britain in such a light.