Debt Ceiling Impact – A Prolusory
Experts opine that January to June was excellent for America. Stock market was also on a high and performing beyond expectations too. Dollar/Investments poured in simultaneously. Companies’ Cash Balance was almost at an all time high.
Global slowdown; European uncertainty coupled with unrest (Angela Markel’s third successive term is emboldening and a sign of all what Germany did was right for Euro stability notwithstanding); fears of an increase in interest rates (Ben Bernanke’s status quo act providing relief of a sort later); unemployment/joblessness in the U.S.A. not having reached the target expected – were all reasons why Dollar inflows/investments gained during the period.
Well, scenarios do not always remain the same – more so in the picture of economic reality – and with the U.S.A.’s reputation in the world taking a beating as a consequence of the “Government Shutdown” (will it be the longest ever shutdown in history with just a few more days to make it so?); dysfunctional political system and the squabbles among the legislators ; the economic scenario in Europe witnessing a refulgent glow; – nobody can be sure of what will happen to the much touted U.S. recovery. Is it illusory or real is what concerns everyone including the common citizenry.
Emerging markets in general, India in particular, ‘a mon avis’ is quite some distance from recovering – the Global/International factors being just a small, but not so much a significant factor. Our legislators are exhibiting a poor show of themselves when the need of the hour is to stand in unison in this critical period (in the history of India probably since the 1991 events); high degree of uncertainty with no dynamic management in sight in many sectors (specially manufacturing); without anyone ready to extend a shovel to the teetering individual in a deep hole – the time ahead will make us to look up to someone like the U.S.A. in partnership in the world. Our economy remains vulnerable but certainly not a calamity or a suddenly violent upheaval happening as many doomsayers tend to paint. The rupee will become weaker though.
( I will add further with some specifics after the Debt Deal on the 17th portrays some clarity.)