13th March

Agenda for G20

The article talks about the prospective agenda for the coming G20 meet on April 2 with respect to the global economic downturn and the role of governments, central banks and most importantly the IMF to fight the Great Recession, as called by Fund’s MD Dominique Strauss-Kahn.

As projected by IMF, the world economy would shrink to register only 0.5% growth this calendar year with a possibility of negative growth in the coming year, the first after the WW2. It could be detrimental to emerging economies like India whose prospects are linked to the world growth. However, the IMF MD calls it a Great Recession instead of Great Depression. Main reasons for this include, the proactive role played by the central banks all over the world by issuing stimulus packages which was not there during 1930s. Also we could see less possibility of protective trade practices but a move towards created a better balance or rather decreasing the current imbalance in the global economic order on a long term.

Thus, the main agenda for the upcoming G20 summit should be to bring out solution to get the world economy out of current comatose state and address long-term imbalances. 

Resilience at lower levels

The article tries to alley to fears over contraction in the industrial production, India has witnessed which is appears less drastic at the macro level but is severe at micro levels. However, there is a need to change the sentiments of consumers as the contraction is more sentiments driven then by decline in real income.

As the overall industrial production declines by 0.5%, it is not as bad as expected and especially when compared to other economies in the world. However, at the micro levels, the figures are discouraging with respect to Processed Food industry (-16%), Transport equipment and parts (-13%) are some of the examples. Even the exports have declined massively. 15.4% growth in capital durables, although on lower base, should nullify fear over decline in precipitous decline in new investments. Growth in consumer goods after three month downward rally is a positive sign. Even bourses have taken a break from its southwards stride and rallied 2% over positive global cues. Thus, the resilience at lower levels shows a sharp revival when sentiments improve.

Govt debt-financed stimulus could possibly crowd out private borrowers. RBI could soften it by reducing the CRR which is high currently at 5% of banks’ demand and time liabilities. Govt and RBI needs to ensure that credit needs would be met when economy recovers. Much of the decline is sentiment driven which changes rapidly. 

Michael Rocks Again

The article talks about the comeback of Michael Jackson on the international music arena with his proposed 10-concert tour, his first in 12 years, with the designer Christophe Decarnin of Balmain. At the same time he also attempts to stop the auction of some of his 2000 precious possessions in California this April.

The comeback would surely give a boost to Balmania brand. Christophe Decarnin has been known for his relentlessly wicked, defiantly counter-culture and unabashedly loud and sexy style which is inspired by metamorphosing a man with a Sparkling Glove. Thus, this concert comes at the best time for both Decarnin as well as for all those fashion lovers. Even if the Jackson is not able to stop the auction and the concert goes as a big flop, at least he would be satisfied to prove that there will always be takers for the Off the Wall genius.