Comments on: Response to stimuli http://blogs.business-standard.com/joydeep/2009/01/05/response-to-stimuli/ Blog on to Indian Business Sat, 07 Nov 2009 16:58:14 +0000 http://wordpress.org/?v=2.0.2 by: challenged http://blogs.business-standard.com/joydeep/2009/01/05/response-to-stimuli/#comment-13683 Fri, 09 Jan 2009 10:47:17 +0000 http://blogs.business-standard.com/joydeep/2009/01/05/response-to-stimuli/#comment-13683 Montek Ahluwalia's interview in today's BS is a must-read for everyone. He has explained in a short paragraph on global imbalances what the economic crisis is really about. It is for the intelligent to place his words in context and draw conclusions about how much good all these stimulus packages can achieve without an addressal of "root causes", that much maligned phrase of unreconstructed liberals who still insist the world must prosper as one. Montek Ahluwalia’s interview in today’s BS is a must-read for everyone. He has explained in a short paragraph on global imbalances what the economic crisis is really about. It is for the intelligent to place his words in context and draw conclusions about how much good all these stimulus packages can achieve without an addressal of “root causes”, that much maligned phrase of unreconstructed liberals who still insist the world must prosper as one.

]]> by: Sagar Sarkar http://blogs.business-standard.com/joydeep/2009/01/05/response-to-stimuli/#comment-13658 Wed, 07 Jan 2009 12:43:35 +0000 http://blogs.business-standard.com/joydeep/2009/01/05/response-to-stimuli/#comment-13658 Hi Joydeep, Thanks for flagging me on to your blog......it's a bit of a catch 22 situation isn't it? In UK, an hour ago chancellor Alistair Darling has said that the crisis in Britain is 'far from through' and his comments have come on the eve of another expected interest rate cut from the Bank of England tomorrow - it is widely speculated that borrowing cost will be slashed between 0.5 and 1.0 %, making it the lowest in UK history!! So, in spite of all these rate cuts and targeted packages aimed at the financial sector, automobile sector, etc. demand is not being generated to adequate levels....why? I think it's due to public sentiment - remember the old economic maxim - ' money flees from where there is fear' That's what has happened - there is a fear psychosis and again partly the media is to blame - because in UK every tabloid, every paper, every TV channel has only been speaking about credit crunch so much so that even my 9 year old son and his friends know the term - this has caused a public apathy to investing and spending, leading to a bearish sentiment of hoarding and waiting and watching. Yet, I tell you one thing - the day Christmas sales opened up in UK during 2nd week of December, the papers reported that a million pounds a minute was spent across the UK - in the first few hours....so where did that money come from? People in this country WILL buy for Christmas like we would for Diwali/ Durga Puja/ whatever.....so the money is there, everyone from institutions and companies to common people are in fear of recession - governments across US/ UK/ EEU/ INDIA / China all need to come together and be able to first restore confidence by showing a plan of action which they should sign up to and follow - I feel this will ensure that demand returns - at the end of the day a nations economy is for the people and run by the people - this is lesson governments will have to learn. Hi Joydeep,

Thanks for flagging me on to your blog……it’s a bit of a catch 22 situation isn’t it? In UK, an hour ago chancellor Alistair Darling has said that the crisis in Britain is ‘far from through’ and his comments have come on the eve of another expected interest rate cut from the Bank of England tomorrow - it is widely speculated that borrowing cost will be slashed between 0.5 and 1.0 %, making it the lowest in UK history!!

So, in spite of all these rate cuts and targeted packages aimed at the financial sector, automobile sector, etc. demand is not being generated to adequate levels….why? I think it’s due to public sentiment - remember the old economic maxim - ‘ money flees from where there is fear’ That’s what has happened - there is a fear psychosis and again partly the media is to blame - because in UK every tabloid, every paper, every TV channel has only been speaking about credit crunch so much so that even my 9 year old son and his friends know the term - this has caused a public apathy to investing and spending, leading to a bearish sentiment of hoarding and waiting and watching. Yet, I tell you one thing - the day Christmas sales opened up in UK during 2nd week of December, the papers reported that a million pounds a minute was spent across the UK - in the first few hours….so where did that money come from? People in this country WILL buy for Christmas like we would for Diwali/ Durga Puja/ whatever…..so the money is there, everyone from institutions and companies to common people are in fear of recession - governments across US/ UK/ EEU/ INDIA / China all need to come together and be able to first restore confidence by showing a plan of action which they should sign up to and follow - I feel this will ensure that demand returns - at the end of the day a nations economy is for the people and run by the people - this is lesson governments will have to learn.

]]> by: Ramakrishna http://blogs.business-standard.com/joydeep/2009/01/05/response-to-stimuli/#comment-13653 Tue, 06 Jan 2009 17:46:11 +0000 http://blogs.business-standard.com/joydeep/2009/01/05/response-to-stimuli/#comment-13653 Good Article, our PC who was then FM, maybe had a an inkling of all these, that's why he started by waiver of farm loans, and then by the generous sixth pay commission to the govt employees. the demand will surely pick up in time. Good Article, our PC who was then FM, maybe had a an inkling of all these, that’s why he started by waiver of farm loans, and then by the generous sixth pay commission to the govt employees. the demand will surely pick up in time.

]]> by: Jyothi http://blogs.business-standard.com/joydeep/2009/01/05/response-to-stimuli/#comment-13652 Tue, 06 Jan 2009 15:51:42 +0000 http://blogs.business-standard.com/joydeep/2009/01/05/response-to-stimuli/#comment-13652 Well said... demand is also a creation of excess money in hand....how many couples started off with 2 BHK flats in Mumbai when, in the earlier generation, people moved to 2 BHK flats only towards retirement. Cheap money was one reason for all the bubble, and rate cuts are doing the same thing again.... so does this mean the cycle will come back to haunt us in 2015? The Seven year hitch? Well said… demand is also a creation of excess money in hand….how many couples started off with 2 BHK flats in Mumbai when, in the earlier generation, people moved to 2 BHK flats only towards retirement. Cheap money was one reason for all the bubble, and rate cuts are doing the same thing again…. so does this mean the cycle will come back to haunt us in 2015? The Seven year hitch?

]]> by: Nirupam http://blogs.business-standard.com/joydeep/2009/01/05/response-to-stimuli/#comment-13648 Mon, 05 Jan 2009 14:05:07 +0000 http://blogs.business-standard.com/joydeep/2009/01/05/response-to-stimuli/#comment-13648 The piece makes sense..how to generate demand? text book macroeconomics says that either the public sector(read govt) infuses demand or the private sector..presently the private sector is down and out, so that leaves the govt to do so? but given the dismal performance in implementing developmental schemes not much can be hoped for though money shall flow into the system. But there is a ray of hope and that is the potential rural consumer base ; and how do u cultivate that?? put purchasisng power in their hand and the way to do it is investment in "agriculture" the mainstay of 70% of the population of this country. Long ago Lord Keynes said"In the long run we are all dead" so not to worry about the long run, but i am sure if Keynes was witness to these times he would have no hesitation in saying - even in the short run the option seems to be running out!!! The piece makes sense..how to generate demand? text book macroeconomics says that either the public sector(read govt) infuses demand or the private sector..presently the private sector is down and out, so that leaves the govt to do so? but given the dismal performance in implementing developmental schemes not much can be hoped for though money shall flow into the system. But there is a ray of hope and that is the potential rural consumer base ; and how do u cultivate that?? put purchasisng power in their hand and the way to do it is investment in “agriculture” the mainstay of 70% of the population of this country. Long ago Lord Keynes said”In the long run we are all dead” so not to worry about the long run, but i am sure if Keynes was witness to these times he would have no hesitation in saying - even in the short run the option seems to be running out!!!

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