INSUBCONTINENT EXCLUSIVE:
When Greece was in trouble few years back I was not at all worried because it was too small for the system to get any lasting damage but
Italy is different and Italian political crisis is a black swan testing the fate of European banks
Indian economy is stabilising, credit growth is picking up but foreign investors are selling
That's the key takeaway from recently published Macroeconomic dashboard for May 2018
worship is taken seriously
I reiterate that this is only a sampling of some of the best content I read through the week, with a dash of my
currencies issued by central banks is eroding
The simultaneous correction of equities, bonds, and the US dollar at the end of January may offer a glimpse into the erosion of the
Interest rates are starting to go up, and the tide of global liquidity is beginning to go out
Flattening interest rate spreads have empirically anticipated downturns and the subsequent appreciation of gold.
The second change is the
tide in the global monetary order, which could see the US dollar potentially de-throned sometime in the future
The process comes with geopolitical polarisation and rhetoric that promotes divisiveness above unification
The effect on the US could be very significant, with gradual loss of currency domination impacting inflation and interest rates
Gold will see increasing demand as a substitute.
Finally, the third change is technology- the digitalisation of all transaction across the
globe and the popularity of cryptocurrencies
Cryptocurrencies and especially the underlying decentralised ledger technologies will fundamentally change business and possibly the reality
of the global monetary order
Gold and cryptocurrencies are friends, not foes
In fact, a collaborative approach would play to the strengths of both
The first gold-based cryptocurrencies are underway as we speak.
Gold should benefit from a dynamic environment of fundamental change and its
The global boom, fueled by ultra-low interest rates and the never-ending expansion of the money supply and credit, is on shaky ground
The report anticipates a significant global economic dislocation with a substantial effect on the gold price in the coming years
Italian political crisis is a black swan testing the fate of European banks The Italian political crisis has sparked fears about the fate
Market watchers are concerned that after years of austerity and shoring up capital, the institutions are still weak, and failure to unify
the region's disparate banking system will result in a financial crisis
According to Eurostat, Italy today accounts for 15.4 per cent of eurozone GDP and 23.4 per cent of the bloc's public debt
For comparison, Greece contributed 2.6 per cent to eurozone GDP upon the start of the Greek crisis in 2009 and today accounts for 3.3 per
cent of the eurozone's pile of public debt.
A health check on European banks tells the story
While these institutions appear to be in a more stable position than they were in 2016, they still suffer from undercapitalisation, the
burden of non-performing loans and low profitability
sheets, according to the European Banking Authority.
Financial crises are typically characterised by heightened uncertainty about the
quality and valuation of assets held by banks
This can have negative implications for even sound banks' access to and cost of funding, as markets may not be able to properly discriminate
between good and bad banks.
In the recent past, the EU stress tests have attracted criticism for not being as rigorous as their counterparts
Critics say that the tests rely on risk-weighted measures of bank capital ratios that have been shown to be less predictive of bank failure
than unweighted leverage ratios
supervisors about the right level of capital.
The Italian crisis demonstrates that the supervisors in Europe are still far from being ready
to face black swans that threat the eurozone's viability
Macro-economic Dashboard- India (May 2018)The 10 Year G-Sec bond yields widened slightly m-o-m to 7.83 per cent in May 2018
The yields continue to be under pressure due to weakening macro variables (oil, inflation, CAD, INR) and foreigners remaining net sellers of
Indian debt.All EM including India are witnessing selling of FPI in bonds and equities which is also reflected in our bond yields
Year to date, India has recorded biggest outflows of foreign institutional money in 10 years.Bank non-food credit growth increased over 12
per cent y-o-y for the fortnight ended May 25, 2018, aided by gradual recovery in economy
In addition, rising yields in debt markets could have shifted some credit demand to banks.Deposits grew by 7.6 per cent y/y for the
fortnight ended May 11, 2018
Since the credit growth remains higher than the deposit growth rate, banks will have to raise their deposit rates meaningfully to meet
in April 2018 due to slower expansion in output and domestic demand
But it remained above the 50-point mark that separates growth from contraction for the tenth straight month
Inflationary pressures intensified with both input and output prices rising at the fastest pace since February
When Hero worship is taken seriously Psychologists have found that hero worship, which is actually more about the worshiper than the
worshipped, can also have a feedback loop, affecting the person worshipped
Emulating a hero or a person who has achieved great things should not be confused with worship.
The former is a positive psychological
development, and the latter a distinctly dangerous one as it typically involves those fawning over the target feeling incapable of doing the
hard work of self actualisation themselves
What is happening is that the worshipers unconsciously believe that they'll find fulfillment by being a small part of what their idol has
Research into this phenomenon shows us that people create a vision in their heads of their idol and project that onto the chosen target
All too often the standard set is impossible to live up to
The problem here is two-fold
If the target isn't careful he or she can become a prisoner to expectations which are increasingly impossible to achieve
The target sometimes actually buys into what is being said about him or her
When this happens, what may have been an otherwise grounded, sane person literally loses the plot
It is no longer ok to acknowledge shortcomings, and no longer mistakes are acceptable, and this places extreme pressure on the person
Increasingly, the target is forced to make a decision
Furthermore the target is expected to do, say and achieve unusual and grandiose things
When they do, a positive feedback loop ensues whereby nothing is considered too outrageous.
Acknowledge they're not superhuman, which will
inevitably invoke the wrath of the mentally disturbed fan crowd
We could probably say "hell hath no fury like a fanatic who wakes to find his god isn't real."
