Rich and The Responsible II

The idea of Rich and The Responsible basically started out to show that there is a difference between those who have money and those who are actually rich. The thought of being responsible towards ones actions or showing and sharing responsibility towards the society is what according to me makes people rich. 

The founding lines of this idea were taken from an extract of a memory from my home to office ride on a cool Wednesday morning. 

A hijada made me realise who the real responsible are.  As I reached in for my wallet I realised that they didn’t come asking for money every day. So I asked her, 

 

‘Don’t you come every day?’

Her answer struck me deep and hard. She said

‘If I come here every day, wouldn’t all your money be mine?’

It sounded like she was just reminding me of common sense. But her matter-of-fact made me think for a long time. I still think about it when I see rich people talking about investments to save tax, evading tax, hiding money and never stopping from making more and more money. 

There’s nothing wrong in making money, but there comes a question when it comes to making money by stopping others from doing the same. And that’s what Obama plans to do. 

In Rich and The ResponsibleI, I spoke about the bad rating of S&P and Moody’s on the Indian economy. The article took the example of the real estate bubble to question the credibility of the S&P’s ratings.

Picking it up from there, let’s look at the recent turn of events.

On June 11 2012, S&P issues warnings of downgrading the credit rating of India and makes comments on India’s leadership stating that India is run by a Powerful Sonia and an Appointed Prime Minister. The Rating agency goes further to make remarks on economic slowdown and a loss in GDP could be the consequence of a lack in policy making. 

Quite naturally this wasn’t accepted by the Indian Finance minister and he went out to say that the Indian economy is one of the most stable economies and growth related problems will be addressed soon. Sadly for him, the very days to follow showed that the Industrial growth had also taken a dip. 

To speak in favour of S&P; or so as to speak, there hasn’t been any improvement on Indian front. But, the World Bank did come public and say that the Indian Outlook is good. The report also said that India will be moving up to 6^th spot in the world’s biggest economies. 

Now here’s what I think is the reason for India going bad. Obama.

The US presidential elections are in this November. Obama clearly wants to remain president for another term and he can do that if he convinces his people of two things:

                       1.      Terrorism is kept at bay.

                       2.       There is enough money in the USA. 

He has made progress on the first point by taking care of osama. Coming to the second, there is practically no way of encouraging investor confidence at a time when there are trillions of dollars of debt on Uncle Sam’s head.

But he has to do it, he needs the people to believe that the Obama and the Democrats can provide jobs and save Americans from mounting debts.

What does Obama do? Is there a trump card? Another trillion of the World Bank’s money? Not really, at least not when the elections are so close.  Taking a loan is inevitable for America, but the longer he pushes it, better are the chances of gaining investors and his remaining in the white house.

What does he do?

He picks on an easy scapecountry. India.

Phase 1: S&P, Moody’s etc issue statements on India’s falling economy and downgrade India.

Phase 2: Rupee starts doing badly on Dollar and then starts doing badly on all Currencies. 

(I have doubts that the USA with allies started selling out the Rupee, and the sharp fall led other countries to do the same, resulting in a falling rupee)

Phase 3: USA issues oil import sanction enforcements on India along with other major oil importers.

Phase 3 evokes chaos in India and the leaders are biting each other’s backs.  

Phase 4: S&P downgrades India from stable to unstable and makes comments on policy making. The restricted FDI along with this comment makes foreign investors think low of India. 

Phase 5: US lifts sanction enforcements.

Phase5 is to show the people that India will comply to the will of USA. As a part of Phase 5 USA still keeps the enforcements over China to show that China’s no better than India and is well covered under their thumb.

In all this, Obama’s aim is to show the investors and the people of USA that USA has control over major parts of the world. The effects of this are:

  

 1. Investors opting out of India, China etc; with the euro zone is complete disarray they have but 1 option, USA. 

  

 

2.       People of USA gaining confidence in Obama and The Democrats.

As an effect, the economy of USA would see an upward trend. More money, jobs and happy people would pave way for Obama’s Second term as President. But what of India? China? Or the rest of the world? Will they crumple under Obama’s success? Or will they hold on to their reputation of “emerging” economies and emerge out of this clutter? If they do? What options does Obama have? Drop the curtains on his ploy and pull out the roofs of his people? Or apply for fresh loans? 

Can he control the monster he has created out of Uncle Sam to feed his greed of continued occupancy of the white house? Is it more personal than it looks? Or more importantly, does he even care?

Rich and The Responsible - I

This post comes out as a reaction to the recent downgrading of Indian Outlook by S&P and Moody. These two are organizations that do the Risk rating operations and analysis on investments, credits and everything they feel like. Like India for example. 

To throw light on what I’m talking about, just last week the S&P downgraded the Indian outlook to negative from being stable. In simpler terms, it’s branding India to be a Risky place for investments. This might not come as a surprise to some and they might even agree to this as the Indian markets haven’t showed a lot of stiffness, some of the big bosses have drawn graphs crossing the red line. To add, there’s the rupee losing ground on the US dollar. From this point, it sure seems like Indian economy is risky. 

To add to this one flamboyant “rating” the Moody has come out and done more act of downgrading India. Well, this time they’ve taken on 3 private banks; HDFC, ICICI and Axis Bank have been given bad ratings by moody and there is a speculation over LIC; India’s biggest PSU insurance provider. 

Why!!! Why are you throwing stones at me??

Let’s take a deep breath and do what a glass house dwelling stone pelter deserves.

Looking back into very recent history, wasn’t it the S&P and Moody who gave a triple A rating for the Housing Credit Securities? They said that the money lent on houses was insured as they had the house in possession which could be sold to a new customer if the loan was defaulted.  Seems sensible, and so thought the countries who bought these sensible “securities” what happened later?? The housing prices started falling, people couldn’t sell houses, they had to take fresh loans to pay out to their housing loans. This debt after debt burst the housing bubble and everything was ruined. Billions of dollars were lost, people came to the streets and no one had money. All this was in the USA, what about the countries who bought these “insured securities”?? The rest of the world laughed at them and they lost all their money, and more than half the world had to apply for loans from the world bank. That was the beginning of the recession era.

What brought all this? The AAA rating by S&P.

Economists, or in general anyone with common sense across the globe believed that the system of rating itself was corrupt. The US govt. must have been at bed with S&P and Moody and forced them to give an AAA rating so as to be able to sell their rots to the rest of the world. 

Now, just about 6 months back when the S&P gave USA a bad rating, everything went haywire, like hell had descended over earth. At that time, the head of S&P who was an Indian was sacked and the rating was reversed. After 6 months, we see that these very respectable organisations are throwing stones at the Indian economy. My take is, that after the Indian Head had been sacked from S&P and an American past VP of Citi Bank had been made the new head, they went back to sleep with the Fed govt of USA. 

It’s only fitting that the federal govt of USA and these rating organisations are playing this game of downgrading India together. With the presidential election looming close, and Obama’s failing promise of providing jobs and curbing outsourcing, this might be his last ditch effort of bringing money back to the USA. By defaming India, they are hoping to suck money and investors off India. Will this pump money back into USA? Only time can tell. But is this the right way to become rich? 

I wasn’t sure of the answer myself. Until I met a Hijada on the street this Wednesday.