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Charts & Analysis

Munger’s Chutzpah, Overheating India, PMI


Mish is pissed at Charlie Munger’s Gall, Chutzpa and Unmitigated Effrontery when Munger thanked God Bailouts were given rather than handouts. I agree with Mish – this is rich, coming from a guy who benefited hugely from the bailouts. To tell the working classes to “suck it up and cope” is very very insensitive, and is the exact kind of argument that will provoke the average american to poke him with pitchforks if the tables turn violently. At this point, there is probably enough outrage to say that if there is another crisis, there will be zero public tolerance for a wall street bailout. Which, I really think, is a good enough reason for the people in power to do anything they can to prevent another crisis – precisely because next time, there will be no financial system to speak of. But I digress.

Niranjan Rajadhyaksha asks if India is overheating. The answer seems to be no – considering moderated scale of growth, M3 growth (only 15.1%), bank credit growth of just 20%, inflation comign down, lack of a credit bubble and the fact that our market-cap to GDP is only 104%. All the data looks good compared to Jan 2008, but I’m not sure that was the tipping point for “overheating” – that point was likely to have been a long time earlier (and remember, this is the time when the world economy was doing fairly well, in comparison with now). Are we reaching bubble territory – definitely, with market caps going higher than GDP (and wait, a good number of more IPOs are on the way) and P/E rations going through the roof. Niranjan does complain about current account deficits, but honestly that’s bound to happen because we are a net importer, and we won’t let our currency appreciate in any serious way. The fiscal situation seems worse than it needs to be, with the government doing the overspending rounds again. That is sad, and looking at the state of the Common Wealth Games, I doubt the government should be trusted with anything more complex than, say, sharpening a pencil.

Overheating or not, Cops are throwing migrant workers out of Gurgaon.

India’s September PMI shows a fall to 59 from 61 – but everything above 50 is expansionary so there.


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