Sunday, 19 February 2012

Politics & Economy - The Perilous Duo

Uncle Sam in one of his speeches delivered after S&P's downgrade of the US Credit rating said, " The present status is a result of nothing else but the downgrade of US Politics from AAA Level to AA Level..." - This statement was enough to highlight the predicament of the world's most powerful nation when it came to passing economic policies with the interference of bad politics.

This is just one of the countless examples when bad politics interferes with the normal economic chores in a nation. This statement shall become more firm with the next few citations.

Beginning with the gravest danger lurking in the world markets today - Euro Sovereign Debt Crisis -  and a more dangerous cloud that worsens the situation is the EU Politics - where the healthy northern nations are not ready to come to terms with the deteriorated southern nations (PIIGS - Portugal, Ireland, Italy, Greece & Spain) and the southern nations are not ready to accept the measures that can in a way rescue them from their plight to some extent.

Greece as some say has witnessed the worst politics ever with the government playing foul by faking the austerity measures concurred upon them by the Troika comprising of the EU, ECB & IMF.
Germany on the other hand continues to act as the plenipotentiary; ready to decimate Greece & other members of PIIGS by prevailing over the Troika's decision. (Thanks to the robust German economy even during these times.)

Coming to our very own nation India - traversing to the end of 2011 - The markets were down, the INR faced the wrath of the USD, 'inflation' was inflating ( cited in the previous posts ) - the UPA thought of a cunning step to revive markets by allowing 51% FDI in multi brand retail - a move that could have proven to be a boon for the markets - a drug that revive the economy, bolster the agriculture et al;
but again came the clouds of bad politics with the opposition in connivance with 'true traders in disguise' openly vituperated the government's move - leading to a withdrawal of the decision.

The move further defamed Indian government's stance on the global stage - with the investors losing faith in Indian politics forcing them to further stay away from the 'desi' market.

What the above discussion and examples connote ? A simple fundamental - for the economy to work smoothly it is primordial that the polity that runs a nation should play healthy and work for the development of a "nation as a whole"; keeping aside their personal interests.

PS: The Indian economy today has healed to a large extent - something I'll cover in my next post. Stay glued.

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