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Archive for the tag “Raghuram Rajan”

In Defence Mode

Mr. Rajan, the governor of the Reserve Bank of India, has been honored with awards this winter for his role in helping to bring momentum back to the country’s economy. His unexpected interest rate cut on Thursday helped strengthen emerging market stocks around the world.

At home, the view is less favorable, as Mr. Rajan finds himself caught in a political struggle.

Read Here – The New York Times

Genteel Warriors

Central banking isn’t a contact sport like football, or even cricket. But the head of India’s central bank, who until recently was living and working in the U.S., is throwing some sharp elbows at his counterparts at the Federal Reserve. This is as close to a brawl as you’re likely to see in the genteel world of official monetary policy.

Read Here – Businessweek

India’s Proverbial Frog In The Pot

Banking reforms alone, however, aren’t going to bring foreign investors back or prevent the rupee from falling further. This is (Raghuram)  Rajan’s real challenge: He is stepping into a stew of financial chaos, missed opportunities and political paralysis that has been simmering for years. It’s no longer inconceivable that India could become the first of the BRIC economies — BrazilRussia, India and China — to lose its investment-grade rating. And Rajan may not be able to do anything about it.

Read Here – Bloomberg

Why Stimulus Has Failed

Two fundamental beliefs have driven economic policy around the world in recent years. The first is that the world suffers from a shortage of aggregate demand relative to supply; the second is that monetary and fiscal stimulus will close the gap.

Is it possible that the diagnosis is right, but that the remedy is wrong? That would explain why we have made little headway so far in restoring growth to pre-crisis levels. And it would also indicate that we must rethink our remedies.

High levels of involuntary unemployment throughout the advanced economies suggest that demand lags behind potential supply. While unemployment is significantly higher in sectors that were booming before the crisis, such as construction in the United States, it is more widespread, underpinning the view that greater demand is necessary to restore full employment.

Read Here – Project Syndicate

 

Celebrity Economist Rushes to Save India

The first time I met Raghuram Rajan, the Indian economist couldn’t sit still.

It was over coffee in Bangkok in November 2008, less than two months after Lehman Brothers Holdings Inc. imploded and almost took the global financial system down with it. Rajan had become a big draw by then, having warned as early as 2005 that a crash was coming. On that day in Thailand, he had a more local crisis on his hands: The hotel’s WiFi was out.

“I’ll be back — I need to make a call and make sure the world economy is still there before I begin my speech,” he deadpanned. “You never know.”

That last sentiment could also apply to an extraordinary bit of recruitment on the part of Indian Prime Minister Manmohan Singh. Rajan, 49, is one of his most pointed critics, never one to shy away from slamming India for trying the same failed policies over and over again. Rather than castigate Rajan, Singh offered him a job: top adviser to the Finance Ministry.

Read Here – Bloomberg

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