Conventional wisdom says that sovereign defaults mean the end of the euro: If Greece defaults it has to leave the single currency; German taxpayers have to bail out southern governments to save the union. This is nonsense. U.S. states and local governments have defaulted on dollar debts, just as companies default. A currency is simply a unit of value, as meters are units of length. If the Greeks had skimped on the olive oil in a liter bottle, that wouldn’t threaten the metric system. - John Cochrane
Switzerland is struggling in export markets, but for a long time they have succeeded with a strong safe haven currency. Germany has had a stronger currency in the past and they did well before the eurozone, believe it or not. Germany might rather have “the Swiss problem” than co-write loans to Italy. They just need to survive the transition. - Tyler Cowen
If the euro zone breaks into sorry little pieces, Germany could possibly lose its entire €495 billion Target2 claim. That’s more than $650 billion. It is 60 percent bigger than Germany’s annual federal budget—and larger than the lending under the European Financial Stability Facility and other aid programs that have received more scrutiny. - Bloomberg
The Italian economy has now contracted in eight of the last 15 quarters, and GDP is back in the good old days of 2003. ...... What is absolutely shocking is that in the ten years up to 2010 Italy had an average annual growth rate of just 0.28%. Assuming growth of about 0.5% in 2011 (which may now be generous), in the decade to 2011 this will drop to 0.15%, and if we pencil in a contraction of 1% in 2012 (perfectly realistic, in fact it will probably be worse) then the number turns negative. That is to say, on average the Italian economy will have shrunk every year for a decade. ...... With neither exports nor private consumption able to pull the economy the state has been under constant pressure to offer support via deficit spending, leading to the accumulation of an unsustainable quantity of government debt. This deficit spending is about to come to an end (permanently according to the latest EU agreement), and under these circumstances the economy is likely to remain in or near contraction for as long as it takes to recover competitiveness. The question is, how long is that going to be, and what will happen to the debt dynamics in the meantime. - Edward Hugh
In America, we keep asking why the Germans don't join with the European Central Bank to end the run on the European periphery. The answer is simple: they don't want to end the run on the European periphery. To them, the run on Italy and Greece and Portugal and Spain is a feature, not a bug. It's leverage, and they want to use it. Look how much it has already gotten them. Greece, Portugal, Italy and Ireland are working their way through stringent deficit-reduction plans. The widely disliked governments of Greece and Italy, which proved unequal to the task of fiscal reform, have been toppled. There is a good chance that the euro zone might become what Germany has always wanted it to be: a fiscal union, in which the members meet their deficit targets and reform their labor markets. And none of this would have happened without the markets making their run at the European periphery. ....... So my concern isn't that the Germans are selfish and calculating. It's that, without quite realizing it, they have become reckless. They are trying to time the market, betting that they can, in essence, manage the run -- that they can do just enough to keep the pressure on without letting matters get totally out of hand. They are like a doctor who, faced with an unhealthy patient presenting signs of a heart attack, demands to see the patient lose weight before they will administer the life-saving treatment. In almost all of their arguments, the Germans are right. The euro does need to be fixed. But first it needs to be saved. The Germans are betting that this is their opportunity to do both. If they're right, it will have been a remarkable play. If they're wrong, it will have been a disastrous one. - Ezra Klein
If the sovereign debt plunges, the banks will need more support; and the ECB will take on the risk. Open Europe said encouraging the banks to “load up on risky sovereign debt just to keep the eurozone ticking over in the short-term” could amount to a “spectacular own goal” by the ECB. Of course central banks can in theory expand their balance sheets as much as they like. In practice, like everyone else, they have to maintain the confidence of the markets. And at this rate, as Open Europe says, “it remains unclear how the ECB would cover losses in the event of a sovereign default.” The ECB can only absorb so many losses before it has to either ask for more capital from member states or print more money - both of which would be politically impossible and damaging to the ECB’s standing. - Louise Armitstead
This 3 year LTRO Ponzi scheme could potentially result in an even bigger money-printing operation than anything the US, British and Swiss central banks have done on their own accounts. It would allow the banks to rebuild their equity with no dilution to shareholders. And if the banks in Italy or Greece became too "profitable" by using cheap ECB funding to buy up their entire sovereign debt markets, then the Italian or Greek governments could always recover the "excess" profits with special taxes. The governments could thus effectively reduce their own cost of funds to the 1% rate offered to banks by the ECB. Of course if the Italian government defaulted on its debts, Italian banks would go spectacularly bust. But these banks would go bust anyway if the Italian government ever defaulted. All the incentives for Italian bank management will therefore be to go for broke in their sovereign debt markets, making maximum use of the new ECB credit lines. That said, however, the European Banking Authority's recent stress tests forced banks to assume mark-to-market losses in the stressed scenarios. These demands from the EBA may inhibit banks from adding more sovereign risk—unless the EBA uses the "fiscal compact" as an excuse to ease up on the stress tests. And it is crucial to remember that banks are likely to use the ECB credit lines only to buy the bonds of their own national governments, partly in response to political pressures but also for prudential reasons. If the Euro were ever to break up, Unicredit would not want to own any Greek or Spanish debt, since this would entail unpredictable currency risks. An Italian bond, by contrast, would be redenominated into the new Lira and would be matched perfectly against Unicredit's borrowings from the Bank of Italy, which would also be redenominated into Lira. Thus, the result of the ECB's covert QE via the banks will be gradually to re-nationalise the banking systems and the sovereign debt structures in Europe. This process will help Club Med countries avoid sovereign debt defaults, but it will make eventual breakup of the euro much less painful – and therefore more likely. - Gavecal
There are many grounds to object to this arrangement. One, as my colleague James Mackintosh has argued, is that it would force banks to replicate the bet on eurozone sovereign debt that Jon Corzine made at MF Global with such spectacularly bad results. But the biggest worry is that European leaders appear to be repeating one of the original sins that led to the eurozone crisis in the first place: forcing banks and insurers to load up on government debt. Mr Sarkozy’s call is perhaps the most explicit sign yet that “financial repression” – the term coined by Carmen Reinhart for using captive domestic investors to keep interest rates low – is one of the main ways that western governments will try to get rid of their huge debt burdens. ..... Signs of financial repression in the eurozone are already widespread. Greece this week sold six-month bills at auction at a yield of 4.95 per cent, more than 1.5 percentage points lower than Italy recently sold similar bills. But in the secondary markets, the only yields that Bloomberg quotes for Greek short-dated paper are 330 per cent for one-year bills. - Richard Milne
If banks load up even more on SGIIP sovereign debt this will make it harder not easier for banks to issue term debt. So funding markets will stay closed for longer. This in turn would mean that more banks become more reliant on ECB funding. We anticipate that neither the ECB nor bank managements would want to see this play out. ..... Banks' access to ECB funding requires them to post collateral. So we could have a situation where banks exchange (market-based) unsecured funding with (ECB-based) secured funding. But if banks encumber more of their balance sheets via ECB repos, then this reduces the amount of assets that senior unsecured bond holders would have a claim over in insolvency. This means that ECB funding subordinates the remaining senior unsecured investors. This balance sheet encumbrance may, therefore, increase the cost of banks' non-ECB unsecured funding and make it difficult for banks to wean themselves away from the ECB and back on to senior unsecured. So 'excess' bank usage of the 3 year LTRO runs the risk of creating more banks who are 'addicted' to ECB money - ie the classic model of 'zombie' banks. ..... Banks that do not access ECB funding (perhaps in a show of strength) would be put at a competitive disadvantage versus those banks that do. If ECB-funded banks pass through the lower funding costs to customers, they will likely take market share from the 'stronger' banks and structurally depress RoEs for the non-ECB funded part of the market. If ECB-funded banks don't pass through the lower funding costs they will make fatter margins, so they win again. Taken in isolation, this would seem to be be a deeply perverse example of moral hazard. - Barcap Macro Sales
“When investors are constantly asking what you have on your books and the board is asking you to reduce your exposure, it doesn’t really matter about the economics of the trade,” said the treasurer of one of Europe’s biggest banks. “Am I going to buy Italian bonds? No.” - Intl Financing review
Don’t get too excited. This bazooka is actually a bulldozer. Rather than having the potential to flatten sovereign debt problems, it can only make them pile up into an untenable mountain — with far too much maturing within the 3-year life of the ECB program. ...... And gradually, as that pile of near-term borrowing and rollover needs grows ever bigger and ever harder to move, yields will rise sharply even within the 3-year life of the ECB program. Thus, what the ECB has likely provided is a very brief respite, but one that does nothing about the euro area’s underlying debt and growth problems. Debt dynamics, which are proving much too powerful for Europe’s muddle-through course, will soon take hold again, worse than before. - Jed Graham
This would imply an increase in bank leverage ratios far beyond the 30-40 multiples that already exist (which would be a disaster when tighter Basel III capital requirements kick in). In practice, depositors would flee, and you would end up with a European banking system where bank bondholders, not the ECB, would be subject to the losses, since the ECB’s collateral claims would be senior. ...... As I noted last week, what investors really want isn’t just for someone to buy distressed European debt, but for someone to buy that debt and willingly take a loss on it so the money doesn’t ever actually have to be repaid. This is a solvency issue – a shortfall between money owed and the resources to credibly repay it. There is no legal trick to get around that. Ultimately, you either have to restore credibility, or you have to restructure the claims through default or devaluation. - John Hussman
European banks, especially in the troubled periphery, are mortally dependent upon the ECB for liquidity and finance. These banks will acquire whatever collateral the ECB prefers to lend against. It is not a matter of trying to profit from a spread. A spread would be nice for banks, a subsidy that will help them recapitalize over time. But holding collateral the ECB wants is a matter of life-or-death for them, every day. If the ECB wants Italian bonds, they will be supplied. If the ECB prefers that Italy “face market discipline”, it can quietly hint its concern and steepen the haircuts it imposes when the country’s bonds are offered as collateral. Banks will start to divest, replacing them with whatever the ECB favors. ....... If European states become dependent on bank finance, they become dependent on ECB finance. The ECB would have the power to manufacture fiscal crises for a misbehaving state at will, and with marvelous deniability. Laundered through banks and then through capital markets, ECB actions would be attributed to nameless bond vigilantes rather than unelected technocrats. ECB haircuts would very quickly be self-justifying, and disentangling cause from effect would be nearly impossible as officials might privately telegraph changes before anything is put in writing. Control would be hidden as a market outcome, a fact of nature. - Steve Waldman
If default and haircuts are not on the table, then allowing banks to finance their sovereign debt holdings at a lower rate than the yield they earn on the sovereign bonds (at the same tenor) is simply a transfer of wealth from the Eurozone taxpayer to the banks. - Ashwin Parameswaran
Make no mistake about it, this is doubling down and raising the stakes. It’s funding debt through more debt. ....... Do note also that the ECB has made no strong promise to continue this program, and indeed it is not in a position to make a credible commitment, most of all on the quality of collateral issue. That means a lot of ups and downs, shifting credibility, and the gains could well collapse quickly. - Tyler Cowen
There is just one little fly in the ointment. We’re going to be gearing the eurozone banking system up on sovereign debt. Which means that if anyone does in fact default then the eurozone banking system really will go bust, crash and burn in a great big ball of flames. - Tim Worstall
Now, with wounded [government and central bank] balance sheets, perhaps the arsenal is empty and the next bust may well be like the old days. GMO has looked at the 10 biggest bubbles of the pre-2000 era and has calculated that it typically takes 14 years to recover to the old trend. An important point here is that almost no current investors have experienced this more typical 1970's-type market setback. When one of these old fashioned but typical declines occurs, professional investors, conditioned by our more recent ephemeral bear markets, will have a permanent built-in expectation of an imminent recovery that will not come. - Jeremy Grantham
What if the entire period from the invention of the steam engine to the invention of the internet were not the normal thing, but the abnormal thing? What if the “lost decade” we have just gone through is actually the mean…the usual…the normal thing? And what if — after nearly 3 centuries — we have just now reverted to it? ....... Today, there is hardly a stock, bond, municipal plan, government budget, student loan, retirement program, housing development, business plan, political campaign, health care program or insurance company that doesn’t rely on growth. Everybody expects growth to resume…after we have put this crisis behind us. Growth is normal, they believe. But what if it isn’t normal? What if it was a once-in-a-centi-millenium event, made possible by cheap energy? - Bill Bonner
Almost the entire future increase in oil supplies projected by the EIA (Energy Information Administration) is based on unconventional supplies (tar sands, deep-sea drilling, enhanced oil recovery, oil shale, etc.), with the word ‘unconventional’ being shorthand for ‘more expensive’ - Michael Cembalest
Beijing's suburban Miyun County is going to build a large European-style town within five years and no one will be allowed to speak Chinese there, said the county mayor. Wang Haichen said a local village would be turned into a 67-hectare English castle with 16 courtyards of unique houses. It will offer visitors souvenir passports and ban Chinese speaking to create the illusion of being abroad, Beijing News reported today. - Shanghai Daily
Interestingly, Caixin reports that some city governments are forcing local developers to continue buying land whether they want to or not — which makes local efforts to loosen up lending look less like real economic stimulus and more like a dangerous game of pass-the-buck. ....... I was reading through a recent report by Pivot Capital when I came across the following factoid, which set me back a bit. It turns out that the average home price in Guiyang – the capital of Guizhou, the poorest province in China — is now nearly the same as in Phoenix, Arizona, a city roughly the same size (4 million people) but with a per capita GDP about 10x Guiyang’s. - Patrick Chovanec
Faced with the political imperative to meet their social housing targets, local governments have done two things to reach their targets:
1. Started projects by digging holes in the ground – and postponed any actual building until funds become available.
2. Reclassified developments they were doing anyway as social housing. Thus, downtown redevelopment, factory and university dormitories and so on all count now as social housing. We asked our developers how much of the local government‟s social housing build was really „new‟ housing; two-thirds of them said only 0-30%. Furthermore, he says, the central government has quietly broadened its definition of social housing. - Stephen Green/Standard Chartered
Almost half of Gansu Highway's outstanding loan principal and interest due this year -- 24.1 billion yuan -- is being rolled over into its outstanding bank debt, and the company plans to repeat that exercise every year until at least 2019 when it is forecast to owe lenders 148.9 billion yuan, according to a chart in the prospectus it issued for a 2 billion-yuan bond sale last month. ..... Gansu Highway’s situation encapsulates the problem of local government borrowers, which often have minimal or no plans to repay debt aside from borrowing more money, says Fitch’s Chu. ..... “In the past, Chinese banks could carry borrowers like this indefinitely,” she said. “But today they don’t have the large cash reserves they used to to do this. I don’t see how all of this doesn’t turn into a major problem at some point.” - Bloomberg
Relative optimists (like the folks at Dragonomics) put China’s actual debt to GDP ratio at 90%. Pessimists (like Victor Shih, Michael Pettis, or the folks at Fitch) put it at 200% or higher — Greek levels. - Patrick Chovanec
On India's Food Security Bill:
Food security comes from ensuring three things: creating jobs and income, ensuring higher food output by raising productivity, and creating a safety net to feed those who can’t do so themselves in distress situations. What the Food Security Bill does is to make the exception the rule: offering food subsidies to almost all people (65 percent of the population) without an end-date. This is irresponsible populism. A government that does nothing in its seven-year tenure (so far) to improve agricultural productivity and which fails to invest in research and infrastructure suddenly wants to end food insecurity with a bill two years before an election. - R. Jagannathan
Sonia Gandhi’s controversial Food Security Bill has a ticking time-bomb inside. While it is well known that priority households will get rice, wheat or coarse grains at throwaway prices of Rs 3, Rs 2 and Re 1 a kg, a small clause inserted in the Bill will ensure that these prices may become politically impossible to change. According to BusinessLine, the Bill has replaced the original intended phrase of “not less than”s 3, Rs 2 and Re 1 by the words “not exceeding”. This shift in phrasing means that if ever the government wants to raise the price of over-subsidised grain, it will have to get the law amended by Parliament. This is a ticking time-bomb since price increases will not merely be an executive decision of the government, but will call for debates and discussions in Parliament. One can bet that no political party will ever call for raising prices, even when they become uneconomical. - R. Jagannathan
The proposed food security Bill may cost Rs 2 lakh crore annually for the Government. ... Earlier the annual cost was estimated at Rs 1-1.5 lakh crore, but a latest calculation by the Commission for Agriculture Costs and Prices (CACP) could show a higher outgo. The Finance Ministry allocated Rs 60,572.98 crore in the Budget for food subsidy during current financial year. - The Hindu
The present Union government believes (under the influence of NGOs) that whatever is desirable is also feasible. Cheap food, abundant public employment and a generous welfare state can be created simply because one believes it can be. It does not seem to matter if the resources to do so are nowhere in sight. - Siddharth Singh
What does the new legislation do? It creates Orwellian categories like priority households and general category households. And it introduces more forms of differential pricing. In short, it wilfully incorporates into its design three features that have made schemes in the past a failure: impractical targeting categories, administrative complexity, and incentives to game. It almost reads like a set-up. - Pratap Mehta
Labour in FCI (Food Corporation of India) is highly organised and an unskilled worker (loading and unloading job) earns around Rs 35,000 per month. Hundreds of them get more than Rs 1 lakh a month and the highest is about Rs 1.85 lakh per month. - Gulati/Gujral
The problem is not that the poor do not deserve food security, but a harebrained scheme is not going to deliver it. The FSB, as currently conceived, is a messy compromise between what Sonia Gandhi’s NGO mob wants and what the government thinks its finances can afford. Net result: the FSB captures the worst of both worlds. It will neither guarantee food security nor help the government keep its finances in some shape in a year in which the world is going downhill. In fact, we shouldn’t call it the Food Security Bill, but the Sonia and Rahul Political Insecurity Bill. FSB is meant to secure the political fortunes of Sonia and Rahul Gandhi, never mind the cost. Feeding the poor is only incidental to its aims. ........ The UPA government has thrown caution to the winds and is trying to do too many things without thinking about their implications and implementation. Just look at the initiative overload it has convinced itself about: after NREGA, it has legislated the Right to Education, and now is planning the Food Security Bill and universalising health care. It is also planning to legislate tougher land acquisition and mining bills – both of which will take a huge amount of executive time – not to speak of the National Manufacturing Policy. ....... Quite clearly, the driving force behind all these initiatives is the political interest of the First Family – not national interest or the interests of the poor. Proof: you cannot have long-term food security without an agricultural revolution, but the food and agricultural ministries are on opposite sides of the FSB battle. Clearly, Sonia Gandhi’s political needs are trumping good policies. Bad politics is leading to bad economics. ....... The bottomline: the country has enough resources to feed the poor, but not the voracious political ambitions of the First Family. -R. Jagannathan
Taken with the earlier ‘charitable projects’ her government has devised – from the farm loan waiver to the rural employment guarantee scheme, which is leaking like a sieve and has had an unforeseen negative impact on rural wages and inflation – the ill-conceived food security initiative has the capacity to bust the bank. ..... The reflexive instinct to throw money to win political goodwill shows the government’s utter lack of imagination in conceptualising models of economic growth that can empower and enrich people. - Venky Vembu
The policy effort has been extremely skewed towards redistribution over the last three-four years versus trying to boost productivity and have some strong growth generation and growing the pie bigger. So as long as that focus remains, unfortunately the risk do remains to the downside, and food security bill precisely brings into the same old point, not to forget that in the context of what happened to FDI in retail a few days back. So any effort to grow the pie bigger is getting challenged politically but any effort to redistribute is always welcome. This is going to be not sustainable. - Chetan Ahya
On India's retail FDI debate:
Fewer jobs are precisely the point. What India needs is fewer jobs; fewer jobs in retail, fewer jobs in apparel and, most of all, fewer jobs in farming. India cannot become even a middle income country if most of its workers, for example, are farmers. To improve its standard of living, India must use fewer people to produce more agricultural output. Fewer workers in farming (or retail) means more workers producing more goods in other industries. The same basic lesson holds throughout an economy, it is the declining sectors that allow other sectors to advance. Instantaneously? Immediately? With higher wages for every worker? No. Transitions always involve some pain; creation always involves some destruction; growth always involves change. The alternative, however, is stagnation. The politics of growth are difficult because those who lose from change are always present and are often more numerous and perhaps even more deserving than the present winners, the capitalists, the business people, the international mega corps; but today’s losses and gains are fleeting, the permanent winners are the workers and consumers of the future who will know only the benefits of productivity. - Tyler Cowen
On India's Lokpal (ombudsman) Bill:
Team Anna is playing into the government’s hands with the childish belief that legislation alone can curtail corruption. Lawyer friends say more than sufficient laws exist to deal with corruption, from block level to PM, but are never invoked due to the kind of protection the system gives the corrupt. Parties when in power protect each other and themselves by keeping corruption cases on the back burner. Now and again, the CBI is made to squeak just so that the ‘other’ party or political leader behaves politically. The Lokpal that promises now to be a huge, wieldy, gigantic authority set up at exorbitant cost will settle into the usual mix of complacency, inaction and even a bit of corruption on the side. - Seema Mustafa
The decision on a gargantuan bureaucratic machinery that would impact so many lives so deeply need not be taken in a hurry. It cannot be a careless decision. Team Anna and its threats can wait. - Akshaya Mishra
Is the media supporting Team Anna as strongly as it was in August? The answer is ‘no’. A cursory glance at Saturday’s headlines gives you an idea. Is urban India still divided into ‘For Anna’ and ‘Anti Anna’, which were the only acceptable positions in society a few months ago? The answer is ‘no’ as well. There’s a third acceptable position: ‘anti-corruption, but not in agreement with how Team Anna is going about it’. - Anant Rangaswamy
Returning to economic stagnation is bad enough by itself. But this is not the forgiving India of the past. This India has tasted growth, progress, optimism and aspiration. - Shekhar Gupta
The rush to find an all-party consensus on setting up an anti-corruption agency has found expression in the predictable lunacy of caste- and community-based reservations for the proposed Lokpal. ...... These are the same parties that have sliced and diced society into caste- and community-based vote banks and advanced their own fortunes by playing ‘identity politics’ to perfection. - Venky Vembu
This debate misses the main reason why the Lokpal is likely to flop. Even if the Lokpal controls the CBI, it will have no control over the courts. These seem incapable of convicting any resourceful person beyond appeals within his or her lifetime. Little will be achieved if the Lokpal initiates a thousand cases that then drag on for decades, with the accused out on bail. Example: the murder case of LN Mishra, former chief minister of Bihar and right-hand man of Indira Gandhi, is dragging on 37 years after his killing in 1975. The 27-year-old man accused of murder is now an ailing 64. Of the 39 witnesses he cited to prove his innocence, 31 have died, gravely prejudicing the case against him. No less than 22 different judges have handled the trial over the years. The case is being tried on a day-by-day basis, the fastest possible. If this happens in a VIP’s case, what hope of justice do lesser mortals have? The corruption case against Sukh Ram, former telecom minister, has gone on for 16 years. The High Court has just pronounced him guilty, but he can appeal to the Supreme Court. He is now 85 years old and ailing, and may not live to hear the Supreme Court’s verdict. - Swaminathan Aiyar
A clerk in Madhya Pradesh has been accused of amassing assets disproportionate to his income. The police reportedly seized property papers worth Rs 40 crore from his residence. The clerk works at the regional transport office in Indore. Dhuldhoi, who is posted here in the Regional Transport Office (RTO), owns 49 bigha land at different places, four plots, a huge bungalow, another house and a hotel, Superintendent of Police Manoj Singh said. Besides, gold ornaments weighing over one kilogram and silver jewels totaling 4.5 kg were also recovered. He has made substantial investments in life insurance policies, has five bank accounts and owns four costly vehicles and two two-wheelers, he said. The clerk joined the government service in 1996 and presently his monthly salary is Rs 16,000, he said. - CNN-IBN
On India's parliamentary logjam:
The current parliament has done the least work of any in a quarter of a century. - The Economist
UPA-2 is effectively over. All that is left to do is to create the right conditions for the next election, and go for it. ...... If the most powerful politician in the UPA will not back her own government on reforms, the divorce between power and responsibility is now complete. ...... When people have the power to propose huge spending without having to figure out where the money is going to come from, accountability goes out of the window. The result is what we have called Rahul-flation — excess inflation resulting from mindless political spending. - R. Jagannathan
As far as disturbances in Parliament go, my own preference is strongly in favour of a debate. Parliamentary obstructionism can be a part of parliamentary tactics but I admit it should be used in the rarest of rare cases. I think this tendency of too much obstructionism arises when there is a breakdown of consultation between government and opposition groups, or when a crucial debate is not being allowed. Of course, this leads to a legitimate reaction that, is Parliament losing its purpose? Overall though, I’m not sure such negativism is valid because Parliament has also shown great resilience and it quickly gets itself out of a crisis and back on track. But still, I believe all of us have to seriously introspect and make sure obstructionism is used very rarely. Is it being used too frequently now? My candid answer is yes, it is, it needs to come down significantly. - Arun Jaitley
Forget the sorry spectacle in Parliament, in the heart of New Delhi, these days. In nearby Haryana, there has been no discussion in the assembly on any bill for the past decade. Bills are passed the same day they are introduced. ....... Certainly, the one institution that is the heart-beat of democracy, Parliament, has been reduced to a public tamasha. It’s been happening over the several years, but the descent into chaos is particularly stark in the 15th Lok Sabha. C.V. Madhukar, director of PRS Legislative Research, says this is the most disrupted Lok Sabha in the last 25 years. ........ Besides, he asks, “Our Speaker has a lot of power to penalise members who disrupt the House. Why is it never used? Why are marshals not called to remove them?” ......... The current Lok Sabha has 76 members who have been charged with heinous crimes, ranging from murder to dacoity. ........ Cho Ramaswamy, a satirist and journalist from Chennai, has an entirely different argument. He believes that democracy “is in crisis because it is the poor and marginalised who dictate terms. All parties pander to them, in spite of the economy getting into crisis, and politicians are lavishing subsidies on them.” - Saba Naqvi
The West Bengal government just got Rs. 8,750 crore from the central government (read: the Indian taxpayers) to buy time as the state ostensibly tries to fix the enormous hole on its balance sheet. There were no strings attached to this bailout. - Livemint
The average time taken by ships to unload and load at Indian ports is nearly 96 hours, almost 10 times longer than in Hong Kong, a government estimate showed last year. - Bloomberg
One official, monitoring government infrastructure projects, said that of 558 government projects, 241 were delayed as of end-July, resulting in a cost overrun of some 20 percent, or more than $31 billion. The projects, which include setting up airports, new railway lines, shipping ports, roads and power plants, have been delayed by more than two years on average due to issues of land acquisition, environmental clearance and rising costs. - Business World
It is a well-established part of law that an internet host or search engine or site is not responsible for all the content that users may post on it – though they can certainly frame rules and take measures to reduce abuse. But should they be tried for this? Is the Delhi court unwittingly trying to play nanny or muzzle the social media? - R. Jagannathan
For some strange reason, the Indian authorities classify gold imports under merchandise imports, although, for all practical purposes, it is a capital account transaction. It is equivalent to Indians buying an overseas asset. Its impact might be the same in terms of cash flow or liquidity, but in terms of the trade deficit optics, it has a crucial role to play. ..... India’s current account deficit, even if one were to be conservative, will not exceed 3.5% of GDP for 2011. Now, if one took out gold imports, the current account deficit is about 1% of GDP. Absolutely normal and even desirable for a developing nation. - V. Anantha Nageswaran
Female bargaining power in rural Haryana, as in much of northern India, is constrained by widespread discrimination against women. In recent years, however, women successfully demand private sanitation facilities from potential husbands as a precondition for marriage. - Yaniv Stopnitzky
A shocker from Bangalore where 300 children who were trafficked, drugged and forced to beg have now been rescued by the police. What's more shocking is that over a third of these children are infants, all under the age of three. The infants are drugged and used all day to beg for money. They run when they notice the camera. Older kids too are tutored to hide and stay away from cameras and controlled by street bosses who are hardly seen. But it’s the chronic drugging of 108 rescued infants that's most shocking as some were asleep even two days after the rescue. - IBN
An estimated 1,500 children went missing in Delhi between January and April.
