Indian Economy, Post -Election

The Indian economy is going to be steered by a new team. The important ministerial portfolios have been announced. Next week, the prime minister and his cabinet will be sworn in. Thereafter the government is expected to reveal its priorities and roll out its policies. The stock markets have reacted positively to Modi's leadership and promises of economic development in line with his Gujarat Model. What does the crystal ball indicate for the future?

Looking at the surge in optimism and investor confidence, in their recent article  K L Investment Partners  anticipate a long-term bull trend in the stock market and a positive feedback loop in the economy. Their summary:

     India Election Like Abe In Japan: 10-Year Bull Market Has Started

India has a stable, single-party government after 25 years; weak governance due to multi-party coalition politics has been the primary cause for India’s growth being significantly below potential.
Modi, leader of the new government, has a reputation as being pro-business, with the willingness and ability to quickly push through major changes through the complicated, slow and corrupt bureaucracy.
Indian economy has significant tailwinds: demographic dividend, large highly educated and skilled workforce, large and growing middle class.
Risk: terrorist strike leads to the right-wing government initiating a military confrontation with its nuclear armed neighbor (Pakistan).
Risk: ruling party has been accused of having an anti-minority and fascist ideology. With 13% Muslims and 2.4% Christians, this may lead to negative socio-economic consequences.

You can find the full article  here,  as well as breaking news and information on global stocks by expert analysts here.

Keep in mind that making long term predictions is a long shot in the dark ... there is simply too much uncertainty and unpredictability around!

Postscript A government which robs Peter to pay Paul can always depend on the support of Paul. - George Bernard Shaw

---

Global Debt Crisis

We know that the world's financial situation is not too good and that it is affecting everybody's lives. The financial media  have not stopped talking about the crisis in the world economy.

For the average person, most of it is too difficult to comprehend. There is nothing that you and I can do about it, either.

The recent Business Insider carries an article which quotes hedge fund manager Kyle Bass. I think this analogy is worth sharing:

Capitalism without bankruptcy is like Catholicism without hell.

In the article, Henry Blodget, a well-known Wall Street analyst, attempts to explain the world debt crisis and points out a fair solution. Written in plain English, it is definitely worth a few minutes of  your attention.

Faces to Names

When you study  economics, you  become familiar with the names of famous economists - those associated with a specific theory,  those who are authorities on a particular subject. In short, influential economists.

One tries to understand and apply their methods in the work place. One refers to their writings to explain important economic theories to students. I have done both for some years, without bothering about the faces behind the names. Formerly one could see an economist's face only on the covers of his books. Now we have access to unlimited images on the internet. We  can easily link faces to names.

Influential Economists
Arrow, Klein, Lucas and Laffer are among the current influential economists whose works I have tried to study and teach. Now I can also recognise their faces!

Lawrence Klein
Nobel laureate. Father of modern econometrics.
Famous for:
Computerised macro models, analysis of business fluctuations, economic forecasting.

Kenneth Arrow
Nobel laureate.  Pioneer mathematical  economist.
Famous for:
Neo-classical theory, social choice, general equilibrium, imperfect markets and uncertainty.

Robert Lucas
Nobel Laureate. Neo-classical economist.
Famous for:
Rational expectations, micro-economic foundation of macroeconomics, Lucas critique, Lucas paradox, monetary policy.

Arthur Laffer
Supply side economist.
Famous for:
Laffer curve, fiscal policy and taxation, Reagonomics.

As an afterthought, I decided to include Keynes (he died in 1946) in this list of living economists. For two reasons: One, he was arguably the most influential economist of the 20th century and two, because I like his quote "Long run is a misleading guide to current affairs. In the long run we are all dead."

John Maynard Keynes
Founder of modern macroeconomics.
Famous for:

• His treatise: The General Theory of Employment, Interest and Money.
• Keynesian theory, named after his path-breaking new concepts.
• Influencing the policies of governments.
• Being the wellspring from which many outstanding economists (Hicks, Tobin, Samuelson, Solow, Okun et al) have drawn inspiration.