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|Posted on February 7, 2016 at 4:10 PM||comments ()|
It seems like 2016 is likely to be a lean year. The factors to which this can be attributed are many.
But I see signs of great hope of India maintaining the worldwide economic Recovery, perhaps becoming (like Great Britain in days gone by) the foundry and workshop of the world. This is likely to become established in perhaps the next ten years or so, as the Make In India policy promulgated under Prime Minister Modiji gathers force and momentum.
Of the two 'low wage' economies, India now seems to be in the cycle where it takes this crown, while China transits to a semblance of a mature economy, decelerating on the production and manufacture for exports and instead focused on enjoying their substantial capital reserves to raise the standards of living at home, perhaps by offering enhanced medical care, sound amounts of social security, and more expenditure on luxury and leisure, and investing more in infrastructure to go with it (for example telecoms, jet travel, luxury cars, etc).
By some stretch of the imagination, the Chinese may en masse start to enjoy something similar to what they did in England in the 1960s, with a consumer led boom and easy credit.....the good times have arrived. Such policies can be implemented pretty quick in China, which is utilizing the free market economics and quantitative easing monetary policies which have been successful in America and Europe. They have been very responsive to curb exports where their goods were not welcomed by other nations, as well as increasing their capital flows and reducing the interest rate in tune to keep the economy motoring ahead.
In this regard, India could take a hint from China. If the Western economies abandoned strict adherence to the Cambridge macro-economic model of monetary and fiscal adjustments to cope with the aftermath of the 2008 financial meltdown and to create the economy and confidence anew, then it behoves the Indians to take a hint from these measures and methods employed to do something similar. For a nation which has good savings lodged with banks by most people, in addition to owning gold ornaments and property, it seems India can with confidence take heart and reduce the benchmark interest rate. Capital investments will not flee; to the contrary, if there is the prospect of appreciation in a booming market, more investments will flood to India. And of course, it will feed the market, and grow it. There is a huge pent up demand for housing, motor cars, durable goods, etc, and as about 30 percent the population currently become adult, the huge demand potential is obvious. People have the same aspirations everywhere : after graduation, to find a good job, find a partner, get accommodation, own a scooter or a car on lease, and enjoy the good life. Everyone's productivity and service will feed more people. The hopes of all, but especially the 300 million who would become the new middle class in India, rests with the wise adjustments the RBI committee can make with the benchmark rate. It is as significant as that.
Vast amounts of capital have been introduced by the major economies since 2009, the United Kingdom issuing some £375 billion, the U.S. perhaps $6 Trillion, Japan doing a stimulus that was perhaps more than their requirement (and now having a reverse impact, for which I suggest a cutting of the stimulus amount per month), Europe feeding the E.C.B. Stimulus of Euro 60 billion a month...In those economies, there is no lack of capital, if current arrangements are ongoing and maintained.
The Oil exporting nations have seen a huge drop in their incomes, and this will impact their capacity to spend globally. Most nations who export to the Arab world and trade with the other Oil exporting nations will already be experiencing some problems. For their own sake, as well as that of the global economy, it would be just perfect for Saudi Arabia and Russia to call for production cuts, and implement such cuts that the glut can reduce and hence the price could improve for them. It would be good news even for the shale and fracking industries, once Oil returns to a price that makes the industries viable.
I can imagine rising standards of living in both China and India....the Indian benchmark rate converging towards Benjamin Franklin's prescribed figure of 6 percent......Agreement on Oil production cuts by both Saudi Arabia and Russia, thereby helping to improve their own economies as well.
The vast majority of Americans I believe will wish to see Obamacare maintained, as well as current levels of the social net, both of which the Republicans would wish to do away with or severely reduce, making life even more difficult for the youngsters and the retired folks. I understand most states give a small sum to each college leaver who is not able to find a job, but this is only for 13 weeks, after which they are high and dry. That used to be so before the enlightened policies of the Democrat administration under Mr Obama. Such policies would probably be revised under the Tea Party.
It is abundantly clear by everything she says, Mrs Clinton cares deeply about the well-being and financial prosperity of all the people. If she becomes elected, the world can once again resume the symphony of Recovery and Prosperity. For that I pray.
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