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

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Manipulating Basel III

The global banking lobby has managed to block structural reform aimed at averting another financial crisis as in 2008. It first stalled radical reform measures to restrict the activities of banks and break down institutions that were too big to fail. The focus then shifted to Basel III proposals that would strengthen capital requirements. But the global banks have now managed to dilute even the Basel proposals so as to make the changes currently on the table insubstantial.

Enveloped in the Peace of the Dead

Nothing ever happens in the country to those who have pelf and power even as millions get pushed to the margins. Those like Natha in Peepli Live are enveloped in the peace of the dead!

The Return of Fiscal Dominance

Cross-border finance will increasingly be shaped by the fiscal crisis in the advanced countries.

High Court's Verdict on Khairlanji: Justice Diminished

While commuting the death sentence of the six convicts in the Khairlanji dalit killings case to imprisonment for 25 years, the high court did not think there was a caste angle or that any planning was involved in the crime. Indeed, the Khairlanji murderers had almost managed a cover-up at the local level; the cracks appeared only as a result of public outrage. It is still rumoured locally that the kingpins have gone scot-free. The whole episode reveals, in a microcosm, the character of the state vis-à-vis dalits.

Counting Castes: Advantage the Ruling Class

If castes are counted in the 2011 census, it will be the second biggest blow to the emancipation project of the oppressed, the first being the Mandal reservations.

In Defence of Complexity

That complex financial derivatives lay at the root of the financial crisis is a seductive but wrong idea. When liabilities are complex assets cannot be simple, otherwise we will have a mismatch between the two. The problem is not with the nature of derivatives but of the incentives. Financial regulators need to concentrate on incentives that reduce the build-up of lending in a boom, irrespective of the precise instrument of leverage.

World Economy Not Out of the Woods

The world banking system has been adjusting to the post-crisis deleveraging in the household and corporate sectors. At the same time, leverage in government has shot up as governments have intervened massively to rescue financial systems and to boost public spending in response to recessionary conditions. As the recent Greek crisis has vividly demonstrated, a new threat looms, namely, a rise in sovereign risks and the prospect of default on government debt. Where do we stand in relation to the crisis? Has the banking system recovered and to what extent? What new risks raise the prospect of another recession? What risks are emerging markets exposed to? A discussion based on the April 2010 edition of the Global Financial Stability Report of the International Monetary Fund.

Modi Spews Caste Venom

Caste venom is embedded in the body politic of this country. The BJP occasionally spews it; the Congress successfully conceals it.

The IMF on Capital Controls

Why has the International Monetary Fund argued, through a staff paper, that there could be circumstances where capital controls may be warranted. It could be that since the current surge in capital flows to developing countries is causing problems, the IMF possibly does not want to be seen as having made the mistake of opposing capital controls as a means to manage excessive inflows. It has still to forget the criticism it faced when its intervention in the east Asian crisis exacerbated the downturn. On the other hand, by boxing in the situation where such controls are warranted, it appears to be encouraging policymakers in emerging markets to avoid such controls and providing them with the ammunition to justify inaction.

Maharashtra at 50: Celebration or Shame?

The idea of Maharashtra had nothing to do with Marathi parochialism. The radical tinge that resonated in the slogan "Samyukta Maharashtra, Socialist Maharashtra" implied that the new state was to favour the interests of workers, farmers, dalits and minorities, with Marathi merely providing the sociocultural glue in its shaping. Tragically, what Maharashtra has been reduced to by its leading, regressive politicians, is the very antithesis of what it was designed to be.

Supervising the Regulators?

What specific failings, if any, of the current regulatory structure have led to the proposed creation of the Financial Stability and Development Council is a question that needs to be answered by policymakers. Institutional reform is normally triggered by the failure of an existing institution to perform an assigned task or to keep pace with changing times. Has the existing regulatory system coped poorly or not adapted to changes? Looking back, neither institutional failure nor an inability of the present structure to respond to shocks to systemic stability justifies the FSDC.

Who 'Owns' the Foreign Exchange Reserves?

The old idea about the "use" of foreign exchange reserves is now being expressed in a new form. It is suggested that a part of the reserves could be drawn on to set up a sovereign wealth fund to acquire raw material assets abroad. This is just as bad an idea as the proposal mooted years ago.

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