ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

H T Parekh Finance ColumnSubscribe to H T Parekh Finance Column

Lucrative Defaults by Hungry Corporates

The implementation of the Insolvency and Bankruptcy Code, 2016 has led to aggressive competition to acquire firms that have been subjected to the resolution process. This suggests that the default that required the creditors to bring these firms to the National Company Law Tribunal was not due to poor fundamentals. Moreover, the decision of the original promoters to try and enter the fray as bidders for defaulting firms indicates that they too do not see the firms and the activities they are engaged in as unviable. Yet, there is much pressure on the government to favour those who seek to game the system.

That Sinking Feeling

The United States (US) is sinking. It is what happens to a country when it blames everyone else for its ailments. The problem is that when the biggest boat in the water sinks, it pulls others down with it. This is not, therefore, time for the rest of the world to indulge in Schadenfreude over the...

Miscommunicated Monetary Theory

The Modern Monetary Theory is described as an integration of endogenous money, state money, credit money, and functional finance theories. Despite departing from a faithful narration of what actually happens in the real world, the MMT arrives at a new world in which the government can spend as it pleases. Not only this and several other difficult-to-swallow claims, but also academic concepts such as vertical and horizontal components of money supply introduced along the way are what make MMT difficult to communicate to the general public and also difficult to fully appreciate.

Weak Note of Caution on Unconventional Monetary Policies

The prolonged deployment of “unconventional” monetary policy responses that began in reaction to the financial crisis of 2008, especially “quantitative easing,” set off speculative investments and fuelled asset bubbles. Since they cannot allow the new bubbles to give in, policymakers must persist with decisions that inflate asset prices. By doing so, they end up sitting one more bubble on the previous one. The probability that one or both may burst has only increased.

Revamping Bank Regulation

One of Donald Trump’s big election promises was a substantial rollback of bank regulation. Trump and his Republican followers believe the regulations ushered in by the Dodd–Frank Act in the United States (US) are too onerous and too complex. They think it could render large US banks uncompetitive,...

Is ‘Islamic Finance’ Islamic?

Riba could mean usury, interest, economic rent and even surplus value (in the Marxian sense). Riba is “un-Islamic.” Without riba, capital accumulation, and capitalism itself will not be possible. However, those who own capital in the Muslim world have taken charge of defining what is Islamic and what is not. The result? They find ways to multiply it in modes that benefit only themselves, just as their non-Islamic counterparts.

Debts That Cannot Be Paid Will Not Be

Total global debt has increased, growth has been slowing down since the onset of the global financial crisis in 2007 and has been rapidly decelerating after 2012. This may be a sign that the world has arrived at its debt carrying capacity or has even crossed it, meaning that capitalism is probably already insolvent.

Public Bank Privatisation in a Post-truth World

The Narendra Modi government appears to have decided to privatise public sector banks (PSBs). Preparations are underway with arguments being marshalled that “there is no alternative” to privatisation. Noises of this kind have emanated often from the Reserve Bank of India (RBI) and government...

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