Assorted on India

India’s growth in the 2000s: Four facts

  The rupee: Frequently asked questions

Talk is cheap

Conclusion: there is precious little fundamental reason for the rupee to depreciate as it has done in 2011, and even less reason for it to depreciate at the speed of a Ferrari. If there are no fundamental reasons, what gives? Sentiment and expectations. The Centre has done everything possible to sour expectations and sentiment with regard to India. This has hurt. If this were not enough, the RBI messed up, by talking too much and stating that the rupee was a free floating currency. The market tested that ridiculous assertion. The market won. The RBI had to backtrack. Central bankers should be seen more, heard less. The rupee slide was aided and abetted by mismanagement of the interest rate and exchange rate policy. There is ample reason to believe that RBI is not independent, and that a considerable portion of mismanagement might actually be attributable to the Centre. Whatever the real cause, India is the loser.

The Price of Civilization

Like many Americans, I looked to Barack Obama as the hope for a breakthrough. Change was on the way, or so we hoped; yet there has been far more continuity than change. Obama has continued down the well-trodden path of open-ended war in Afghanistan, massive military budgets, kowtowing to lobbyists, stingy foreign aid, unaffordable tax cuts, unprecedented budget deficits, and a disquieting unwillingness to address the deeper causes of America’s problems. The administration is packed with individuals passing through the revolving door that connects Wall Street and the White House.

-Sachs, Jeffrey D. (2011-10-04). The Price of Civilization: Reawakening American Virtue and Prosperity (Kindle Locations 62-66). Random House. Kindle Edition.

Book Recommendation

10½ Things No Commencement Speaker Has Ever Said

The Harris School of Public Policy

Ph.D. students are required to pass four qualifying examinations offered by the Harris School: methods (statistics and econometrics), microeconomic theory, political economy, and a field exam in a substantive field of public policy studies chosen by the student and the student's advisor. These examinations will ordinarily be taken following two years of coursework. In exceptional cases, a student may propose an alternative to either the methods or the theory examination.

The Harris School's doctoral program (PhD)program - how's it rated among the public policy programs?

Why IMF did nothing when Russia defaulted

We hear relatively little about the struggles between “area” departments, which tend to be relatively sympathetic to the countries they oversee, and “functional” departments such as those responsible for monetary and fiscal policies, which tend to be more critical. Certain departments within the IMF are notorious for being more or less open to new ideas; one functional department during the period in question was informally referred to, less than fondly, as the thought police. Again, this is something about which one would wish to learn more.­...

The book turns next to the Mexican, Russian, and Asian crises. Although these episodes have been extensively analyzed, Boughton offers a few revelations. We are told, for example, how the IMF first learned of the peso’s impending devaluation not from the Mexican government but through an offhand remark by a high-ranking U.S. official. We learn that the reason the IMF did not do more to discourage Russia from defaulting was because of a telephonic miscommunication between Camdessus, on summer vacation in Bayonne, France, and the Fund’s man in Moscow, John Odling-Smee.­

At points the drama is compelling. One cannot help but be impressed by the number of emergency phone calls at 2:00 a.m., and by how frantically IMF officials shuttled to Moscow and Jakarta to keep the world economy from falling off a cliff.­

Boughton describes just how close the world came in 1995, in 1997, and again in 1998 to a “Lehman Brothers moment.” In retrospect it is clear that, already in the 1990s, something was dreadfully wrong with a global financial system that was so vulnerable to collapse. One wonders why the IMF did not do more at the time to rectify the problem.­

See the full review of the book by Eichengreen.