Recession

The inequality generated by decades of neoliberalism and the resentment it has caused across the world have in recent times led to uncertainties that only intensify the fear of recession.

• Growth is decelerating worldwide, including United States which is experiencing 50-year low unemployment rate. China lost momentum with industrial growth at a 17-year low. Prospects for the third quarter are gloomy as well.
• The performance of major economies affects the rest of the world economy. For example, depressed Chinese demand caused the fall in Thailand’s second quarter growth rate to the lowest since 2014. 
• Scattered talk has given way to widely expressed fears of an impending recession affecting financial investment behavior, with investors dumping stocks and shifting to government bonds, resulting in a slump in stock markets.
• The deeper malaise is the depressed demand due to extreme inequality in assets and incomes that has resulted from decades of neoliberal growth across the developed world. Globalization moved productive activities to cheap labor locations had depressed wages across countries with large profits for a few and tax concessions for the rich have accentuated inequality.
• Incomes in the top percentile have exploded, those in the middle and lower ranges have  stagnated sapping consumption demand. Growth came by finding ways of stimulating demand not depending on current income, but driven by credit. That, beyond a point, is not sustainable and the fear of another recession is likely.
• The USA-China trade war and other countries responding with similar measures, the world is faced with a proliferation of beggar-thy-neighbor policies that makes a bad situation worse. The unknown consequences of Brexit cannot be anything but adverse. These uncertainties intensifies the fear of recession.
• The challenge for capitalism was finding an alternative way of reviving demand depressed by underlying inequality. In the past the states used to step in to lift economies out of recession with their spending for a short a time. With neoliberalism that has shrunk the revenues of the state and public spending being is mostly debt-financed, this option was shunned. The only way to drive private demand is with credit in the form of near zero interest rates and getting central banks to hugely increase liquidity in the economy.
• Capitalism’s current predicament arises because this policy has not worked, though it has been experimented with very low interest rates and in some countries even have turned negative. While this policy has not delivered growth, it has encouraged speculation financed with cheap credit. This has led to accumulation of corporate debt as firms borrowed mainly to speculate in financial markets and pay off their rich shareholders with costly share buybacks resulting in asset price inflation and financial fragility. But with low growth central banks were compelled to continue this policy regime.
• But as the threat of recession looms, erstwhile advocates of fiscal prudence and austerity such as the IMF are calling for adding fiscal stimuli to the policy mix. Infrastructure upgrades, expanding public housing stocks and targeted tax cuts should all be considered. This is the recipe for a return to more robust growth and inflation.

The recession threat is immediate and policy is likely to respond too slowly. If the recession does set in, it can be devastating. In 2008 China, Germany and India were affected less and this time they are among the countries whose performance could drive the recession. Corporate debt often denominated in foreign currencies at high levels, a recession would find many debtors defaulting on payments and forced to sell assets. That could result in asset price deflation and will have reverberations in an over-committed financial sector. Only a set of freak occurrences can prevent another recession.

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Parliamentary processes diminished

• What is our conception of Prime Minister Modi when he called parliament “the temple of democracy”? Is it merely a place to ratify decisions made elsewhere in party cabals or cabinet meetings? Or is it a chamber where the representatives of the Indian people assemble to express their considered opinions and thoughtful disagreements, before coming to an outcome in the interests not of a party but of the country as a whole? I guess for Modi it is the former.
• In parliament, the Government will propose. The opposition will oppose. If matters come to a head and a vote is called, the Government’s brute majority will dispose. Merits of the matter hardly matters. This is how our parliament works these days.
• Parliamentary debates have become a ritual. On most issues whip is cracked and MP's duly vote on party lines.
• Even sensible suggestions by the opposition are never adopted.
• With overwhelming majority the Government simply chooses not to listen.
• The Anti-Defection law was passed with good intentions and with which the road to hell is paved. It was intended to stop the aaya Ram-gaya Ram practice of legislators crossing the floor in pursuit of power and pelf. The idea was noble, and rested on sound principles: governmental stability matters; people must stay loyal to the party on whose platform they contested; the intent of voters must not be betrayed by defections.
• The Anti-Defection law 1985 enabled a practice of party whips on all issues, making receptivity to the ideas of the other side punishable with expulsion from the House. The ‘argumentative Indian’ is on display only when he is arguing strictly according to his party’s position.
• The Anti-Defection law has not eliminated the defections, but dramatically reduced them. It only made defections a group affair, more costlier and at the mercy of Speaker, without fear of legal scrutiny.
• Parliament is supposed to be a forum where individual MPs of ability and integrity met to discuss common problems and agree upon solutions.
• MP's are supposed to advocate the wishes of their constituents, rather than themselves. MP betrays himself and his voters while surrendering his own better judgement to the dictates of his party leadership. This is a travesty of the parliamentary process.
• In the UK no whip was issued on a vote for Brexit. No whip was issued for UK supporting the US in the Iraq war. Dissent was freely and honestly expressed on both sides of the aisle. Such freedom is unknown to the Indian MP with the Anti-Defection Law.
• Government and legislation are matters of reason and judgment, and not of inclination. And what sort of reason is that, in which the determination precedes the discussion; in which one set of men deliberate, and another decide.
• Parliament is a deliberative assembly of one nation, where not local purposes, not local prejudices ought to guide, but the general good of the nation. 
• In the early days a prime minister could even be challenged by MPs from his own party -- think of Nehru being attacked by Feroze Gandhi, Finance Minister TT Krishnamachari being forced to resign by his own backbenchers, or Mahadev Mishra challenging his Prime Minister’s China policy. Today conformity rules the roost. So why give parliament an importance its performance does not warrant?
• The first three Lok Sabhas saw as many as 140 days sittings a year. We are now at about half that number, and it is reducing every year. BJP Government clearly has very little time for the distractions of Parliament. State assemblies are even worse: many sit for fewer than 30 days a year, and in Haryana the average is 12 days.
• In the last Lok Sabha, 25% of the bills were passed with scarcely any discussion. Barely 15% of the Union budget is discussed in detail. Our government is spending taxpayers’ money without the taxpayers’ representatives having a meaningful say in how it is spent. 
• Once bills are passed they become Acts, and these are implemented through the promulgation of rules drafted by the Government and are supposed to be placed on the table of each House. The rules are subject to parliamentary scrutiny. Guess how many rules have been discussed in the current Lok Sabha? Precisely zero.
• Our Prime Minister Modi spoke of introducing ‘minimum government, maximum governance’. Instead, we are heading to a system of ‘minimum parliament, maximum government’. The judiciary is stepping into the breach, taking initiatives that should have been done by Parliament. Unelected judges substituting themselves for the people’s representatives. It’s nobody’s fault but our own, but it’s not the democracy.
• It is time to look at our institutions and ask if they are really providing the foundations on which our democratic freedoms must be built. The crisis assailing our legislative representation in Parliament makes this task imperative and urgent.

Beware of ministers who can do nothing without money, 

and those who want to do everything with money

Thrift should be the guiding principle

It is essential that a democracy must function with transparency & accountability and rule of the law must be followed. No expenditure should be allowed without prior approval of parliament or legislature except while dealing with specified emergencies. Ordinances must be discouraged and must be subjected to detailed scrutiny. No Act shall be passed without detailed discussion and rules framed for implementation must be ratified or modified by Parliament or Assembly with in 60 days. Discretion must be eliminated and replaced with well defined processes. Executive decisions must have either cabinet and/or legislature ratification. Projects must be granted by a 'Planning Commission' or 'Niti Aayog' type expert bodies but never by any individual office bearer. Government must focus more on Governance rather than money matters. Nothing should be done unless it benefits larger masses. Extravagance should be despised. 

Brexit means ... £59 billion more debt to UK

 

• Brexit will blow a £59 billion black hole in public finances. 
• At the time that there would be a cumulative £122 billion of extra borrowing over the next five years (or £469 per week), £59 billion of which will occur as a direct result of the vote to leave the EU. 
• Hammond told the House of Commons: [Brexit] makes more urgent than ever the need to tackle our economy’s long-term weaknesses, like the productivity gap, the housing challenge, and the damaging imbalance in economic growth and prosperity across our country.
• The cost of Brexit is £122bn over next 5 years. So where's the mythical £350m per week (£18.2 billion per year) for the NHS (National Health Service) coming from?