Rogoff's Bleak Forecast for the Euro

We have all seen recently what the current Eurozone mess can do to our stockmarkets and to our economy. Therefore, it is in India's interest that Eurozone mess never gets out of control, especially this year when the government's finances are already stretched and it doesn't have the wherewithal for a bailout. Then there is the worrisome current account deficit problem arising from the weakened growth of exports thanks to less-than-satisfactory growth of the global economy and rise in the value of our imports, many of which, we can't do without, chiefly crude oil and edibile oils. To top it RBI has the problem of keeping inflation under check which is still at a fairly high level. In this backdrop, it is further chastening to read eminent economist Kenneth Rogoff's recent article on the euro which has been reproduced in some places http://www.project-syndicate.org/commentary/a-centerless-euro-cannot-hold. Now Rogoff is no ordinary dude. He is famous for having studied recessions and downturns over centuries in his book with his ex-World Banker co-author Carmen Reinhart called  "This Time is Different: Eight Centuries of Financial Folly". He discusses arguments from the theories of two Nobel prize winners James Meade and Robert Mundell to paint a fairly grim future for the euro. Why is an article like this important? Because  you just have to peep into business papers and TV channels to see the plethora of so-called experts who are giving advice and predictions based on the assumption that things will get back to the same old ways of pre-2008. But will they? Has the global economy changed irreversibly by the global economic crisis? Food for thought.

An Export Scam?

It is difficult to be in Delhi and not to get to know whispers or chats about some scam or the other. More so if you are a journalist. Coming on the back of so many outbreaks of scams, I think now definitely it is a case of a scam overload. A recent short chat with a few journalist aquaintances and I come to know about something new. Apparently, there is a huge amount of unaccounted foreign money of India's big daddies and fat cats is coming into the country and then being laundered through export over-invoicing. Knowledgeable people, it seems, are all in the know. Of course, this only proves how dumb and ill-informed I am! The argument is that this is the reason for our recent rocking export growth figures, even in times of global slowdown. What about hard evidence? None. But anybody who knows how our export-import machinery and people function will not find it difficult to believe this allegation. But then other countries also do these things. Export and import figures of countries don't match with those of other countries--some people told me and they cite IMF on this. With stocks and realty markets down, this could be the new trick for money laundering. In this season of scam-exposing, I wouldn't be too surprised if some evidence got suddnely uncovered.