Category: Economy

Jose Vinals, a senior official in IMF,told a news conference that banks should hold the equity buy backs and the dividend payouts. They should resist these temptations,as they have started to make profits ,so to conserve capital, adds the executive. 

A vital statement at this stage, when the banking sector is turning around. This renaissance was enabled by the stimulus package and regulations. The injection of billions into the industry has revived the dying functionaries. The call by the official  is a significant reminder, compelling the executives to work in a disciplined ,diligent method.

Deploying funds in the equity buy backs should be restricted. This measure would thoroughly ensue building up of the reserves. The conservation of capital can be programmed by declining bonus,by stalling hike in pay packages, by compressing the  internal expenditure of the institutions. Cost cutting in establishment charges, in adopting frugal norms in travelling , simplicity  in conducting meetings., should also be implemented to bring down the outflow of funds.

Vinals suggestion to stop the dividend pay outs ,propounds a serious harm to the investor, who did a service to the bank, by putting his funds  in the stocks. He did so with a futuristic desire, of getting good returns. If that right is denied to him,what will be his status?His money gets locked up He has to limit his spending. Is it not a severe punishment?He has to face this ordeal, for no fault of him.

X commits a sin. But Y is penalised. The banking executives did all incredible manipulations. They emptied the Bank’s treasury, but filled their own coffers.They enjoyed hefty salary, relished in high perquisites , revelled in unaccounted money ,brought disgrace to the institutions as such  ,the capital got eroded, the reserves depleted resulting in  a crash of the financial system. All these while, the shareholder ,unable to control the illegalities , sat with hands folded in mute shock.

He started feeling happy, when the companies in which he invested , achieved a refreshing look with their stability reinstalled,and profits accruing. He expects a moderate dividend. But , I anticipate , that small assuage would be stoutly denied by the officials. He has to once again resign to the role of a dumbbell.

Earth is round. Earth is oval. Earth is flat on the edges. It is spherical.It movesaround the sun in ellipses.When it is closer to the sun it moves faster, and when it is away ,it moves slower. The rotation of the earth causes day and night. The revolution of this blue planet brings in seasonal changes. Thus  the earth activity brings about changes that nevertheless has become a routine.

As earth goes round its confirmed passage without much disturbance,so the economy of the nations which occupy the earth’s surface ,go about unperturbed by any form of irrationality.

The placidity of earth,gets a jolt once in  a way, when an unpredictable threat in the guise of quakes, storm, and grave flooding ,most like Tsunami . The devastating severity crosses man’s imagination. The heaving, the tossing, the burning, the smoke and the frothing signals a shudder down the adrenaline.The effect is so piteous ,extremely gloomy and wretched.Why such risky happenings occur?

It ia a point to ponder. The danger comes from man, emanates from his wreckless behaviour, emerges from hs disdain and contempt for the nourisher-earth. The scary apprehensions are the product of Man’s crudities,and indifference.

So much so the economy ,which binds Man financially gets disquieted by his follies and greed.The harmonious blend of nature and living is exposed to the crude ,wicked demonstrations of man. The monetary aspect sets a goal of satisfaction. The enrichment meanders towards a path of modest appreciation.it curves up and down, as the graph illustrates its upward march and down the lane concept.The slow symbolic activity provides a simple formula of Algebra -(a+b(a-b)=a to the power of 2-b to the power of 2.This established formulae get twisted ,when many inclusions are pushed in. The economic activity moved in an applied deviation, until unthinkable clauses and untenable riders disrupted its growth, The mess was pulled into the scrupulous system, by he selfish managerial techniques adopted by the learned Officials. A throw out of financial aid, a lay out of undescribed deliverance,a muzzled arrangement of records, a dubious spread out of disbursement and collectibles, have collapsed the regulated ,system. The insulation that has been stealthily guarded by the department of finance ,has been penetrated by villains and  foxy executives. Putting the ominous I, before every documentation, every transaction, every sanction, has corrupted the economic system.

It is Man ,who has committed a serious ,severe transgression to Earth and Economy , thus strangling  them to a point of tragic death.

Pittsburg has earned surplus revenue ,while hosting the G-20 summit.This is an aside to the serious issues discussed by the 20 nations.

The dominance of G-8 has receeded. This was explicit ,when in November the emerging 12 ,other economies were invited.THe rest takes over the reins from the west. It is an official prerogative, but which actually  is an old news. India , Brazil and China will hold fort. The European nations , particularly France has sunk into oblivion. China has overtaken France.The IMF , has to be reconstituted. Voting powers  and quotas have to be reformed. China  will be the big winner. France ,the biggest loser.The U.S will remain steady.The U.S has to vie with China, in a maintaining an equalibirium . China ,as an exporter , has to consume more. U.S ,as a debtor state , has to save more.China’s currency has been artificially undervalued.Thus China’s  exports are highly competitive, while U.S faces enormous trade deficit.

Pittsburg made a sizeable income fron the meet,also paved the wgolden path or the Rest.

The summit held that recession is completely out, with the pumpingin of billions as stimulus. It is a hasty call, feel the economists, as there is still unemployment, as there is still collapse of banks. The economy is walking with crutches. A thoughtless pull of of the leaning system will prove fatal. The economy ,will struggle. another Lehman  kind of collapse will occur ,demoralising the world.