Since 2011, we are faced with a situation where most
analysts have come to agree that Europe needs fiscal integration with a fiscal
authority and banking integration, a banking union with eurobonds, a banking
supervisor and a European guaranteed deposit fund. Most agree even more that
European deposit insurance and debt mutualisation are not optional; they are
essential to avoid an irreversible disintegration of Europe’s
monetary union as the ERF is a temporary programme that does not lead to
permanent euro zone bonds. The main problem remains that any proposal
acceptable to Germany could
imply a significant loss of sovereignty over fiscal policy for the periphery,
particularly Italy and Spain. On the
other hand, German concerns about the moral hazard of risking German taxpayers’
money will indeed be hard to justify if meaningful reforms do not materialise in
the periphery. But such reforms do take time and the human costs being
inflicted in the process are turning out to be more than significant.
Coming Home, the headline figures for economic growth in
India have been revised downwards; despite putting in place policy measures
that have choked domestic demand and hence growth, prices continue to rise;
government spending continues to grow faster than tax revenues, private and
foreign investment have slowed down and the rupee has been devalued sharply by
market forces, with the rupee hitting an all-time low against the dollar in late-May.
Every discussion on the Indian economy centres around the need for filling chronic
gaps in areas like infrastructure, skilled labour and productive farming, or on
the inefficiency of the system of subsidies. Yet the government remains undecided
on crucial issues like removing certain barriers to investment that could put
growth back on track, while the central bank is circumstantially forced to remain
hawkish in stance even though the latest numbers on growth and inflation increasingly
have a stagflationary ring. Yes even in India there is a human cost
involved in achieving a 6% vs a 9% growth, which may go un-noticed as the
notional loss of being able to change the lives of several waiting to be pulled
out of poverty and unemployment.
Missing
is the swift and almost unanimous decisions taken by policy makers/implementers
through the globe and missing is the flurry of actions taken to stem the Meltdown
of 2008. As Time Slips By policy implementers are bent on Defying Gravity and
say they are In Control and keep waiting for the Panic Attack. We are left to
be Saved By A Miracle, wondering what has changed Between Then and Now? While
they found institutions too big to fail they are not so unwilling to fail the
very people for whom the institutions supposedly are set up. When would the
time be right to come out of the moralistic view on the burden of future
generations and look to the sufferings of the present one? If I Could I would
be a Time Traveller to Check It Out if ignoring the Echoes and Shadows of
Yesterday did we walk Into The Sunset or did we win our Race With Destiny.
(* a la Vinnie Moore)
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