Knock, knock! Who's there?

The biggest worry from the capital markets fluctuation of the past few weeks is that everybody's confused. The consumption data shows slowdown, job growth shows slowdown and there's confusion especially in the emerging markets. India has been badly hit the flight of capital from the stock markets is inexplicable - atleast with my limited reading abilities of analysts' reports.

Ben Bernake has a bit too much in his magic wand. What he says and what he breathes is interpreted, mis-interpreted and re-interpreted depending on whether one is a bear or a bull. The inverted yield curve from 4 months back is gone now. But the signs of confusion are more than visible. Emerging markets like India depend so much on temporary FIIs. This is an awesome video by Columbia guys on how much lies in Bernake's control : http://dealbook.blogs.nytimes.com/?p=2478

The real problem also seems to be with inflation. With oil climbing skyscrapers, it's unlikely that this shock will not slowdown the economy. Historical evidence shows that similar shocks have always resulted in a slowdown. How much does the economy slowdown, determines if there's a recession or not. Anyway, it's a bad time to be in b-school waiting for the big jobs to be made. With inflation, people postpone consumption, which leads to loss of jobs and business downstream and this in turn fuels further slowdown. The govt must react with cutting down interest rates immediately, and encourage consumption so that the economy downstream heats up and propels the engine forward.

What does recession mean to a country like India? To begin with, lower job creation. We've been such fools in not carrying the economic reforms ahead. The left parties always hold back reforms and the Congress Govt itself does not make any bold moves with a puppet PM in place. What it means for b-school would be graduates like us is - possible unemployment! Really hope that doesn't happen.

We are living in some of the most interesting times in the world. The landscape of the world is getting altered like crazy all over. It's only a question of time now when Bush is thrown out of office - China's becoming more powerful and just when Japan is recovering from a long period of deflation and recession, the world's heading the same way again. Latin America and Africa are own their trip!

Anyway, coming back to the topic, the only way out now is some tough talking and action by Bernake and his tribesmen in all countries and hope for the best. Rest is up there!