EcoPolitical

With the Indian markets having a spectacular meltdown over the last few days (Nifty down 13% over the past five days), there are calls on the government to intervene. This intervention is sought in the form of either the government shutting down the stock markets, or at least banning short selling. Neither proposal finds favour with this author due to the inherent weakness of this approach. Market is simply a mechanism of price discovery. It is well known that it acts as a voting machine in the near term, and a weighing machine in the long term. Greed & fear responses of investors find expression in near term stock price movements. The risks of investing in equity is also well known to its participants. As such, shutting down the market due to adverse price conditions, or banning short selling run actually contra to the ethos of investing. While it is true that shutting down the market will freeze stock prices at a higher level, this would not be price discovery. Also, wh...

Every great magic trick consists of three parts or acts. The first part is called “The Pledge”. The magician shows you something ordinary...The second act is called “The Turn”. The magician takes the ordinary something and makes it do something extraordinary. Now you’re looking for the secret… ...That’s why every magic trick has a third act, the hardest part, the part we call “The Prestige” Christopher Nolan Brent crude price saw a virtually unprecedented 30% intraday fall today, and is currently trading near $35/ bbl (down 20% on the day). The oil market that was already reeling under a Covid19 led demand shock, saw a double whammy as Russia scuttled Opec's plans to support oil prices by cutting production by a further 1.5 million barrels per day (mbpd, 1 barrel ~  159 litres ). Note that total global crude production is in the vicinity of 94 mbpd. Opec is a cartel of 14 oil producers that accounts for about 79% of global proven oil reserves, and 30-35% of supply. Sau...

Life is what happens to you while you are busy making other plans John Lennon History tends to fashion itself in a way that is quite different from what people anticipate. Till very recently, no one seriously factored in the possibility of the China story being virtually derailed on account of a viral outbreak (re the Covid19 virus). Consequently, the world was blindsided by this and today the declared cases stand at 92,818 , with unofficial numbers of the infected at many multiples of this estimate.  This author has written extensively on why a ‘Chinese future’ is less likely than what is generally believed, and also on the deep long term impact that diseases have on society: Debt-plomacy, or How China Eats The World China: Till Debt Do us Apart Germs Inc., and the Butterfly Effect The analysts at  Dun & Bradstreet  estimate that there are about 22 million businesses in the regions impacted by Covid19, which will directly or indirectly have a k...