Originally Posted by sridharchennai

Wisey, I have a question for you. How this second round of recession is going to affect India? Last time when the recession hit us we were in a decent position to tackle recession. We were growing at 9%, inflation was it's on it's way down from 13% and the banks were in much better position.

Whereas, this time the growth is already slowing down, exports already reeling under pressure, inflation is not on it's way down even after frequent interest rate hikes by RBI and our banks much more exposed than in 2008.

On the employment and business, is the job market is just going to be stagnant or there is going to be unannounced retrenchment like before and salary cut. Both are not good for the economy and if the retrenchment happens it's going to be a huge blow.

How are the businesses that are related to export gonna survive this time? There are also some small firms that provide very specialized IT and ITES services. How will these firms get affected?

Generally, what is your opinion on the above facts? I know it's a lot of questions and hope you get the time to give us your views.

Originally Posted by bhuvang

Well said, but just one question.

Is it practically possible. Personally, i don't think so till our economic downturn reaches a catastrophic level.

Originally Posted by wiseman

People, don't assume that one has all the answers!

After all, this is happening for the first time in our lifetime and maybe in modern history!

That there will be a recession, its nearly certain. Whether it will be global one doesn't know. Whether it will turn into a depression and a great depression is also a little in doubt.

All of these continue to be on my radar simply because you can expect politicians to do their best in terms of decisions bad in economic terms.

The FED is meeting today. They have a difficult task.

Why is QE3 required at all? The only reason for this is to increase the bailouts by EU Govts of EU Sovereign Debt. But this will NOT go very well with Americans.

Let us wait and watch.

cheers

Originally Posted by sridharchennai

The FED has done what they do the best, they have assured that the interest rate will be zero for the next 2 years. Now, I think there is again lots of foreign money will come into our market and all over the world. I think the inflation will shoot up again.

Regards,
Sridhar

Originally Posted by contra

US Fed has done what many expected it to do....keep interest rates low at 0 - 0.25% atleast till mid -2013. Interest rates have been at such low range since mid 2008. Again the word atleast is significant, which means US Fed even has intentions to keep interest rates at 0% for a much longer time.

There is nothing much other countries can do right now.....other then face inflation. But wait...China has risen the Chinese Yuan the most in 3 years today, Yuan actually jumped the most against the US dollar today. China is definately taking steps if not fast but atleast slowly to re-engineer and reduce dependency on exports to US. We can't expect results too soon and US will continue to rule this game for few more years....after that US will be a big loser, as hyper-inflation and riots (more fiercer then what happened in UK) will take it to destruction.

Originally Posted by bhuvang

I believe China could reduce export dependency on US/EU only to a small extent, beyond that it'll start hurting its own economy. Attached is an article i found today. It doesn't talk exclusively about Chinese exports, but does throw a light on why China can never drive the world economy the way US does.

Here's Why China Can Never Escape Export Dependency

Originally Posted by contra

I never said China would re engineer itself immediately...in fact had said that US will still rule this game and influence for years to come if my argument was read carefully. I am using the word game, because US is arrogant to keep its interest rates at 0-0.25% instead of being a responsible country since its currency is the reserve currency of the world. US is simply taking rest of the world for granted...thinking only about its own selfishly by inflating prices of everything and shifting the burden to rest of the world.


However in the long term (nobody knows when...if somebody knows he should be a astrologer)....China would just be able to reduce its dependency on US...and increase trade with other emerging markets instead and of course China's own domestic market ( China is already the world's biggest market for Cars, Cement and Steel).

So if preparing for long term investments in China, like buying some Chinese Yuan and keeping it safely could be good investments ...again not for today but for long term....when is a question which is difficult!!!.