WorldoutofWhack

Billionaire Ray Dalio, assessing the impact of President Donald Trump’s surprise election, warned that global populism will be an economic force more powerful than monetary and fiscal policies over the next year. We’ve seen similar forces at play in India’s recent elections as well. In an 81-page paper published Wednesday that details the history of populists in 10 countries from Franklin Roosevelt to Hugo Chavez, Dalio analyzed the phenomenon in an effort to make sense of today’s current political environment.

“We believe that populism’s role in shaping economic conditions will probably be more powerful than classic monetary and fiscal policies,” Dalio and three Bridgewater Associates colleagues wrote in a “Daily Observations” report obtained by Bloomberg. “We will learn a lot more over the next year or so as those populists now in office will signal how classically populist they will be and a number of elections will determine how many more populists enter office.”
Populism today is at its highest level since the late 1930s, said Dalio, 67. In the paper, Dalio debuts the Developed World Populism Index which he says he created to measure global populism. It’s a weighted index of the share of votes received by anti-establishment parties or candidates in national elections for major developed countries since 1900. The report includes an analysis of 14 populist leaders from the past, without detailing those currently in office “because the stories of ones in power or possibly coming to power are still being written,” Dalio said.
The report was written with Bridgewater’s Steven Kryger, Jason Rogers and Gardner Davis. It concludes that, in monitoring the early stages of a populist regime, “the most important thing to watch is how conflict is handled — whether the opposing forces can coexist to make progress or whether they increasingly ‘go to war’ to block and hurt each other and cause gridlock.”
Bridgewater notes that populism is commonly brought about by gaps in wealth and opportunity, as well as xenophobia and frustration with government inefficiencies. Those factors lead to the emergence of a strong leader to serve the common man, as well as protectionism, nationalism, militarism, conflict and greater attempts to influence and control the media. Populism has been a key focus of Dalio’s in recent months, as it’s emerged in countries including the U.S., U.K., Italy and the Philippines. In mid-January at the World Economic Forum in Davos, he said that the rise of populism threatens multinational corporations and is the biggest force in the world today.

Trump’s Actions
On the U.S., Dalio said today that “while we consider Donald Trump to be a populist, we have more questions than answers about him and are using these other cases to assess him against by seeing if he follows a more archetypical path or if he deviates from it significantly.” Dalio, who was initially bullish on Trump’s ability to stimulate the economy, changed his view in late January, saying that he was becoming more concerned that the damaging effects of his policies could overwhelm the benefits of a pro-business agenda.
He soured on the leader after Trump banned visitors from several mostly Muslim countries and proposed border taxes on Mexican goods. Trump’s “America First” policy, his executive order on immigration and bent toward U.S. trade protectionism are reminiscent of the policies of populist governments in the 1930s, Dalio and co-chief investment officer Bob Prince told clients at the time.
‘Animal Spirits’
In December, as stocks surged on the back of Trump’s win, Dalio had said that the Trump era could “ignite animal spirits” and attract productive capital. Trump’s cabinet appointees are “bold and hell-bent on playing hardball” to effect major changes in economics and foreign policy, and their leader “doesn’t mind getting banged around or banging others around,” he said. Dalio, who’s worth an estimated $14 billion, cites Roosevelt’s 1936 speech before the Democratic National Convention in which the president described a state of growing inequality where the “savings of the average family, the capital of the small business man, the investments set aside for old age” were used as “tools which the new economic royalty used to dig itself in.”

The value of digital transactions are declining as currency with public gathers pace. Dr Viral acharys was quoted in MINT  “I think everyone should keep in mind that the remonetisation is taking place at a very fast pace. We have some way to go, but I think we expect that within two to three months we will reach full currency in circulation. It will be slightly lower, but it is in that ballpark (number),” he said.

If this entire money is remonetised and goes back into vault then it will be a lost opportunity of a kind of one time dividend which govt would have got (if not immediately) helping govt finances or better for spending on development for society

If this money is used for consumption rather than hoarded then it will create headache for RBI in the form of rising inflationary pressures.

Either ways not a happy outcome

 

This report by PWC outlines the shift in global gdp from G-7 to E-7. Lot of data and charts

Key findings
1. We project that the world economy could more than double in size by 2050, assuming broadly growthfriendly policies (including no sustained long-term retreat into protectionism) and no major global civilisation-threatening catastrophes.
2. Emerging markets will continue to be the growth engine of the global economy. By 2050, the E7 economies could have increased their share of world GDP from around 35% to almost 50%. China could be the largest economy in the world, accounting for around 20% of world GDP in 2050, with India in second place and Indonesia in fourth place (based on GDP at PPPs).

3. A number of other emerging markets will also take centre stage – Mexico could be larger than the UK and Germany by 2050 in PPP terms and six of the seven largest economies in the world could be emerging markets by that time.
4. Meanwhile, the EU27 share of world GDP could be down to less than 10% by 2050, smaller than India.
5. We project Vietnam, India and Bangladesh to be three of the world’s fastest growing economies over this period. UK growth has the potential to outpace the average rate in the EU27 after the transitional impact of Brexit has passed, although we project the fastest growing large EU economy to be Poland.
6. Today’s advanced economies will continue to have higher average incomes, but emerging economies should make good progress towards closing this gap by 2050. This will open up great opportunities for businesses prepared to make long-term investments in these markets. But this will require patience to ride out the storms we have seen recently in economies like, for example, Brazil, Nigeria and Turkey, all of which still have considerable long-term economic potential based on our analysis.
7. To realise this growth potential, emerging market governments need to implement structural reforms to improve macroeconomic stability, diversify their economies away from undue reliance on natural resources (where this is currently the case), and develop more effective political and legal institutions.

 

 

How Ridiculously high salaries at Indian Unicorns are ruining careers and job scene in IT

Indian unicorns may have severely messed up the compensation patterns for young technology workforce in India. In a country where the starting salary for an engineer hired by large IT companies could be as low as Rs. 300,000 per annum, unicorns were, till recently, doling out hard-to-match remunerations. Now, with funding and profitability hard to come by, these companies are laying off workers by the hundreds. And those laid off are finding it difficult to find new jobs because most prospective employers are puzzled by the salaries they have been earning.

“After receiving over 1,000 applications for jobs from Snapdeal or xSnapdeal employees, our experience is that aside from exceptions, 1) high-quality talent 2) overpaid by approximately 1.5-3x. No wonder why these start-ups are failing (sic),” Anjli Jain, managing partner at early-stage investment fund EVC Ventures, wrote in a LinkedIn post last week. Bengaluru-based social wellness platform Zoojoo.be, as a policy, avoids interviewing candidates from “a bunch of startups that we know overpay their employees,” said founder and CEO Avinash Saurabh, who often comes across resumes of engineers with just a year’s experience but “crazy expectations” of earning Rs15-20 lacs per year. “They are talented folks, I am sure, but they are not for us,” he said.

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https://qz.com/928466/with-their-ridiculously-high-salaries-unicorns-may-have-ruined-the-job-scene-in-the-indian-tech-sector/

Domino’s doing best at what they know………Making pizza and delivering them hot

you may not be surprised to learn that pizza production at Domino’s hasn’t changed much in the 57 years since the company was founded. It’s still essentially hands on the dough and in the cheese. But whereas pizza making remains high-touch and traditional, pizza marketing is anything but. There, Domino’s Pizza Inc. has decided that modern works better than authentic and for the past five years, the company has been emphasizing all the ways you can order pizza with minimal human and maximal digital contact. It’s introduced more ordering methods—Facebook, Twitter, Twitter with emojis, Apple Watch, voice-activated, “zero click,” wedding registry—than new items on its menu. Customers can track their pizzas online, starting as they’re being made, and in San Diego (for now; likely nationwide soon) they can track their drivers. If an Australian want to pick up her order, a GPS system can monitor her approach so the pizza is hot on arrival. Domino’s has spent millions to trick out a fleet featuring “the ultimate pizza delivery vehicle”—the DXP, a Chevrolet Spark subcompact with special side doors and warming ovens. An independent franchisee in New Zealand is testing delivery by drone and robot. In 2015, for the first time, more than half of Domino’s orders were placed online, and half of those came via mobile. As the company has built up its tech cred, its financial fortunes have been rising. Since the end of 2008, when Domino’s was threatened by declining sales and distressed franchisees, its share price has increased 60-fold. The company is now worth $9 billion. They know what they are good at, which is making pizza and they are getting better at delivering that Pizza.

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https://www.bloomberg.com/features/2017-dominos-pizza-empire/

The finance world’s short-termism will destroy our communities, economies and the planet.

Central banks and governments haven’t controlled the volume of money in the economy for quite some time now. Instead, it has largely been dictated by private financial institutions. Today, in most developed economies, some 95% of the money in circulation is created by private financial institutions. This is not down to fraud, but thanks to the legitimate creation of wealth through investment and lending. It is a result of what is known as the multiplier effect. This is interesting, because it tells us something about both power and money. When financial institutions decide whether or not to invest or to lend, they literally make most of the money they are investing not as an individual institution, but as a consequence of our financial system. This gives them far more collective power over the economy – and therefore people’s lives – than if they were just lending money that already existed. But this oversized power has not been matched with equal measures of responsibility. Instead, financial institutions continue to react in a way that is short-term and this creates instability. When financial liquidity is most needed, the supply of money is halted – banks stop lending during recessions because investments are less likely to make short-term gains. When money supply needs to be restrained because the economy is heading towards a bubble, the prospect of short-term gains pushes financial institutions to pump money into the economy. If we take a longer view, we stop being scared of lending during a recession and in doing so we reduce the impact and duration of that same recession. If we work towards an economy that functions for everyone, it functions for us.

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https://www.weforum.org/agenda/2017/03/the-finance-world-s-short-termism-will-destroy-our-communities-economies-and-the-planet/

Chinese miracle is over now come hard times

Chinese Premier Li Keqiang told the National People’s Congress that China’s GDP growth rate would drop from 7% in 2016 to 6.5% this year. In 2016, the country’s growth rate was the lowest it has been since 1990. The key part of Li’s statement signalled that the Chinese government has not been able to stop the decline in its economy. That means more economic pain is on the way. Put another way, there are hard times in China that will likely become worse. China’s dilemma, like Japan’s, is that it built much of its growth on exports. Both China and Japan were poor countries and demand for goods was low. They jump-started their economies by taking advantage of low wages and sold products to advanced economies. In 2008, China was hit by a double tsunami. First, the financial crisis plunged its customers into a recession that was followed by extended stagnation. Thus, demand for Chinese goods contracted. Second, China’s competitive advantage was cost, but it now has lower-cost competitors. China’s deepest fear was unemployment, and the country’s interior remained impoverished. If exports plunged and unemployment rose, the Chinese would face both a social and political threat, emanating from immense inequality. It would face an army of the unemployed on the coast. China must also determine how to manage international forces (particularly the United States), which are challenging China and its core interests. China is trying to convince the world that it remains what it was a decade ago. That strategy could work for a while, but many still view China through a lens that broke long ago. But reality is reality. China is no longer the top owner of US government debt; that honour goes to Japan. China’s rainy day funds are being used up, and that reveals its deepest truth. China carried out a great—and impressive—surge. But now, it is just another country struggling to figure out what its economy needs and what its politics permit.

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https://www.forbes.com/sites/johnmauldin/2017/03/14/chinas-miracle-is-over/#566a2acc5a9c