India’s $207 Billion Mess Is Once-In-A-Lifetime Opportunity For Asia’s Richest Banker

In October, we discussed Indian Prime Minister, Narendra Modi’s, decision to hand over $32bn to recapitalise India’s state banks. The motivation was India’s slowing growth rate and the need to add one million Indians to the workforce every month. Crippled by massive bad debts, the state-owned banks were struggling to extend more credit to the economy. The announcement caused a surge in India’s Sensex equity index, led by the banks. India has the second highest bad debt ratio of the world’s largest economies – possibly third since China’s official figure is patently incorrect.
Enter Uday Kotak, Asia’s richest banker (net worth over $10 billion) and managing director of India’s Kotak Mahindra Bank.
Kotak is a self-made man. Turning down a job offer from a multinational, he set up a financial services conglomerate, beginning with bills discounting before adding stockbroking, investment banking, mutual funds and car finance. Kotak thinks he’s spotted a ‘once-in-a-lifetime opportunity’ in Indian finance…so it probably bears considering. Nor is he alone as sovereign wealth funds and pension funds are also taking a close look. The opportunity is in India’s bad loans, as Bloomberg explains.

This post was published at Zero Hedge on Nov 22, 2017.

India: The Genie of Lawlessness is out of the Bottle

Recapitulation (Part XVI, the Last) Since the announcement of demonetization of Indian currency on 8th November 2016, I have written a large number of articles. The issue is not so much that the Indian Prime Minister, Narendra Modi, is a tyrant and extremely simplistic in his thinking (which he is), or that demonetization and the new sales tax system were horribly ill-conceived (which they were). Time erases all tyrants from the map, and eventually from people’s memory.
My interest has been mostly to use these events to document the underlying causes of such utter missteps, which technically must be called stupid, and to explain how the real disease runs much deeper and much wider, and that no solutions for this can be found in the next elections.
My interest has been to explore the socio-cultural foundations of India that keep it perennially poor, wretched, and diseased, a state from which it never seems able to escape. I have attempted to dissect the unwitting tendency of Indians to destroy any material or civilizational advantages, which in the last 300 years have all accrued as products of extraneous events: Free gifts of Western experience and civilization, management skills, and technology, all offered on a platter.

This post was published at Acting-Man on September 20, 2017.

Object Lesson: War on Cash Backfires on India’s Economy

Indian Prime Minister Narendra Modi launched a surprise attack on cash in late 2016. He gave Indians a few days to convert the two largest denomination bills then circulating to bank deposits, after which point any undeposited notes would become worthless. The move was intensely controversial. Transactions completed using cash represented the vast majority of economic activity in the country.
In order to sell the program Modi employed a familiar strategy. He vilified the users of cash as tax cheats and criminals. He promised the measure would punish black marketeers, boost the Indian economy, and increase tax revenues. The latter may be true – forcing transactions onto the grid is good for nosy bureaucrats trying to impose taxes and controls.

This post was published at GoldSeek on 7 September 2017.

Trump Blasts Germany In First Tweet Of The Day

So much for Trump’s lawyers gaining control over the president’s tweeting habits.
Just three after the Italian G-7 meeting ended in an unprecedented lack of consensus over the Paris climate deal, prompting Angela Merkel to announce one day later that Germany can no longer “completely rely” on the US, Trump escalated the dispute with Germany over trade and defense while the German Chancellor met with Indian Prime Minister Narendra Modi in a demonstration of her ability to pivot from the U. S. to strengthen alternative global alliances.
‘We have a MASSIVE trade deficit with Germany, plus they pay FAR LESS than they should on NATO & military,’ Trump said in his first tweet on Tuesday. “Very bad for U. S. This will change”
We have a MASSIVE trade deficit with Germany, plus they pay FAR LESS than they should on NATO & military. Very bad for U. S. This will change
— Donald J. Trump (@realDonaldTrump) May 30, 2017

This post was published at Zero Hedge on May 30, 2017.

India: Why its Attempt to Go Digital Will Fail

India Reverts to its Irrational, Tribal Normal (Part XIII)
Over the three years in which Narendra Modi has been in power, his support base has continued to increase. Indian institutions – including the courts and the media – now toe his line.
The President, otherwise a ceremonial rubber-stamp post, but the last obstacle keeping Modi from implementing a police state, comes up for re-election by a vote of the legislative houses in July 2017. No one should be surprised if a Hindu fanatic is made the next President. India is rapidly entering a new phase.

This post was published at Acting-Man on May 20, 2017.

India – Is Kashmir Gone?

Everything Gets Worse (Part XII) – Pakistan vs. India After 70 years of so-called independence, one has to be a professional victim not to look within oneself for the reasons for starvation, unnatural deaths, utter backwardness, drudgery, disease, and misery in India.
Intellectual capital accumulated in the West over the last 2,500 years – available for free in real-time via the internet – can be downloaded by a passionate learner. In the age of modern technology, another mostly free gift from the West which has significantly leveled the playing field, societies that wanted economic convergence with the West, such as Japan, Korea, Singapore, HK, China, etc., have either achieved it rapidly, or have strongly trended toward it.
Given that Indian prime minister Narendra Modi has been at the helm for only three years, it is hard to blame him in general for any of the above mentioned monstrosities marring daily life in India. The best the head of the executive of an extremely diverse and complicated country can achieve is to nudge the Titanic in the right direction.

This post was published at Acting-Man on April 21, 2017.

India Outlawing Cash Altogether in 75 Cities

Yhe Prime Minister Narendra Modi announced on Friday the 14th, that 75 cities will be designated cashless/less-cash townships, with an overwhelming 56 of them being in Gujarat. Modi is determined to bring India into the 21st century. He is being cheered behind the curtain and every government is keenly watching the results. The townships were actually selected on the basis of a recommendation by none other than Price Waterhouse Coopers (PWC) furthering the G20 agenda to stamp out tax evasion worldwide.

This post was published at Armstrong Economics on Apr 17, 2017.

India: Still the Fastest Growing Large Economy?

India’s Currency Ban – Part X It has now been four months since Narendra Modi declared about 86% of monetary value of currency illegal. Linked here is the last in my series of updates, which was written soon after the deadline to deposit the demonetized currency. Most of the banned currency was eventually deposited, making a mockery of Modi, who had claimed that unaccounted money would not reach the banks. Perhaps 3% of the cash never reached the banks.
Those living outside India still have the option to return to the country, complete a number of formalities at the airport, and then hope that India’s central bank, the Reserve Bank of India (RBI) will do the conversion.
Many of these people are unfortunately return empty-handed. In India, where stamps, signatures of bureaucrats, file-passing, attesting of documents, etc. go with everything, a lot of submitted paperwork is deemed incomplete by the RBI.

This post was published at Acting-Man on March 7, 2017.

As the War on Cash Accelerates, Governments Look to Bitcoin

With India’s recent move toward a cashless society, it’s becoming increasingly clear that a worldwide effort is underway to move away from physical currency, according to Norbert Haering, Ph. D., writer for Germany’s leading business newspaper, Handelsblatt, and author of The Abolition of Cash and the Consequences.
This time on FS Insider, we spoke with Haering to get his take on India’s transition, and those who would like to see cash completely eliminated to be replaced by digitized payments.
Who’s Behind the Move in India?
Indian Prime Minister Narendra Modi’s move to abolish around 80 percent of Rupee bank notes last year stirred a lot of controversy and was a major surprise to the Indian public and others.
That being said, ‘it didn’t come out of the blue like it did for the Indian people,’ nor was it simply an idea that was generated by Modi or the Indian government, Haering stated. ‘It was prepared with foreign help.’ Here’s a clip:

This post was published at FinancialSense on 02/01/2017.

Trump “Day Two”: Preview Of Today’s Key Events In Washington

“Day two” on the job for Donald Trump is shaping up as another busy day for both the White House and Capitol Hill. Below is a preview of all the scheduled events of interest today in Washington.
9am: President Trump meets with CEOs of the U. S. ‘Big Three’ automakers: GM, Ford, Fiat Chrysler 10am: Trump meets with Chief of Staff Reince Priebus 11am: Trump signs executive order; White House schedule doesn’t provide details on what order may entail 1pm: Trump speaks with Indian Prime Minister Narendra Modi 1:30pm: Trump meets with CIA Director Mike Pompeo 3pm: Trump meets with Senate leaders 3:45pm: Trump meets with Senate Majority Leader Mitch McConnell HOUSE:
10am: House convenes 10:30am: House Ways and Means Cmte Chairman Kevin Brady details panel’s 2017 agenda; U. S. Chamber of Commerce, 1615 H St. NW Noon: House considers H. R.7, which would amend Affordable Care Act to bar expenditure of federal money to purchase insurance that covers abortion services

This post was published at Zero Hedge on Jan 24, 2017.

India – On a Downward Spiral

India’s Currency Ban – Part IX
India’s Prime Minister Narendra Modi announced on 8th November 2016 that Rs 500 (~$7.50) and Rs 1,000 (~$15) banknotes would no longer be legal tender.
Here are links to Part-I, Part-II, Part-III, Part-IV, Part-V, Part-VI, Part-VII, and Part-VIII, which not only provide updates on the demonetization saga, but explore and dissect India’s culture and why in this country of 1.34 billion – more than 1 out of every 6 human beings on the planet – so many exist in wretched poverty in this modern age, in an insect-like existence.

This post was published at Acting-Man on January 23, 2017.

India Pays the Price of Demonetization

The first phase of India’s radical demonetization experiment is over. Indian Prime Minister Narendra Modi made waves in November with his surprise announcement that the country’s 500- and 1,000-rupee notes – 86 percent of the cash in circulation – would be discontinued overnight. Dec. 30 marked the end of the 50-day period in which Indians could turn in the now-worthless bills in exchange for new ones. During that time, the Indian government collected 97 percent of the outstanding notes. But the apparent success of Modi’s demonetization scheme has come at a cost for the country’s economy.
Now that Modi’s initiative has weathered the social upheaval it created, forcing disgruntled citizens to wait in long lines to exchange their bills, its economic consequences are coming to light. Between November and December, India’s manufacturing purchasing manager’s index – a key benchmark for tracking manufacturing orders – fell nearly three points, suggesting a slight contraction in orders for the first time in 2016. This may bode ill for Modi’s “Make in India” campaign, an effort to expand his country’s manufacturing sector to absorb its vast semi-skilled labor force and fuel economic growth. India’s formidable services sector has also taken a hit. The Nikkei India Services Purchasing Managers’ Index stayed below 50 in November and December, indicating a decline in service orders, particularly in restaurants and hotels.

This post was published at FinancialSense on 01/13/2017.

The Global War on Cash Is Here – This Is How to Fight Back

The intensifying global war on cash is destined to give the government more control over your money than ever.
Evidence that most of the world’s governments are working toward a ‘cashless society’ has mounted over the past couple of years.
The latest government to launch a major assault in the global war on cash was India. This could foreshadow what’s to come in the United States…
This Is What a Government War on Cash Looks Like
In November, Indian Prime Minister Narendra Modi shocked his citizens by announcing a plan to ban existing 500- and 1,000-rupee notes.
These aren’t high denominations – 500 rupees is $7.37, while 1,000 rupees is $14.75. Together the two bills accounted for 86% of India’s cash in circulation.
Credit Suisse has estimated that more than 90% of consumer transactions in India are made in cash.
‘We can gradually move from a less-cash society to a cashless society,’ Modi said.
Modi gave his citizens until the end of 2016 to exchange the old banknotes – now no longer spendable – for new ones. But there was a shortage of the new bills. People were waiting in long lines at ATMs and bank branches, often to be disappointed as supplies of the new banknotes ran out.

This post was published at Wall Street Examiner on January 4, 2017.

Modi’s Great Leap Forward

India’s Currency Ban – Part VIII India’s Prime Minister, Narendra Modi, announced on 8th November 2016 that Rs 500 (~$7.50) and Rs 1,000 (~$15) banknotes would no longer be legal tender. Linked are Part-I, Part-II, Part-III, Part-IV, Part-V, Part-VI and Part-VII, which provide updates on the demonetization saga and how Modi is acting as a catalyst to hasten the rapid degradation of India and what remains of its institutions.
So-called educated Indians have latched on to the above visual, with full support of the Indian government. It has been shared far and wide in the national media. When you remind them that India’s population is twenty-one times that of the UK and on top of that, the British pound has taken a huge pounding because of Brexit and associated fear in the financial markets, expect to be ignored. You will be seen as anti-Indian.
Given the underlying irrationality and tribalism of India (read earlier updates for more on this), selected numbers are used to rationalize feelings and emotions. You see this everywhere in India: Science – very ironically – is used as a tool to rationalize superstitions and irrationalities.

This post was published at Acting-Man on January 1, 2017.

India’s Prime Minister Has Singlehandedly Crushed the Economy with His Reckless Cash Ban

Today’s piece should be seen as a bit of a followup to yesterday’s post, India’s Demonetization Debacle Highlights the Dangers of Monetary Monopoly. While yesterday’s piece was more philosophical/strategic in nature, today’s zeroes in on some of the devastating real world impacts of Narendra Modi’s insane and inhumane cash ban. It’s hard to overstate the damage this policy has done to India’s economy. Modi is quickly solidifying his place as one of monetary history’s biggest idiots.
First, let’s take a look at the destructive impact the move has had on India’s massive small businesses community. The Washington Post reports:
NOIDA, India – Over the past two years, this suburb of New Delhi mushroomed into a flourishing enclave of small cellphone manufacturers, attracting tens of thousands of workers from the countryside. Noida, known as the ‘handset hub,’ was touted as a showcase for Prime Minister Narendra Modi’s pet ‘Make in India’ initiative.
Then on Nov. 8, Modi’s government took a step that has jolted the bustling industrial quarter. It scrapped high-denomination currency, with a view, officials said, to curbing illicit wealth and the financing of terrorism. But the cash shortage triggered by the move has also curbed legitimate small enterprises. Many of Noida’s manufacturing units have slashed production by nearly half, and more than a quarter of the workers have gone back to their villages.

This post was published at Liberty Blitzkrieg on Dec 27, 2016.

India’s Rapid Progression Toward a Police State

India’s Currency Ban – Part VI
India’s Prime Minister, Narendra Modi, announced on 8th November 2016 that Rs 500 (~$7.50) and Rs 1,000 (~$15) banknotes would no longer be legal tender. Linked are Part-I, Part-II, Part-III, Part-IV, and Part-V, which provide updates on the demonetization saga and how Modi is acting as a catalyst to hasten the rapid degradation of India and what remains of its institutions.
As the deadline of 31st December 2016 approaches, Gresham’s law has been turned upside down. When they needed to be converted, the banned currency notes were trading for a 20% discount to their face value. In the meantime, the discount has disappeared and the banned notes are trading at a premium of 10%. The mafia which deals in the banned notes could not possibly be happier – it promises to be a big supporter of Modi going forward.
As you read this, keep in mind that India’s GDP per capita is $1,718. When the quarter of relatively higher-earning Indians is segregated from the population of 1.34 billion, one realizes that more than a billion people – who are among the world’s poorest and most wretched – exist in appalling conditions.

This post was published at Acting-Man on December 19, 2016.

Soc Gen: India Move to Cashless Society Hurting Economy

On December 7, the Reserve Bank of India, going against consensus expectations, did not cut interest rates – underlying the assumption that the Indian economy, in the midst of moving to a cashless society, was doing fine, was doing just fine. This assumption is incorrect, says a December 12 Societe Generale report. Also incorrect is the assumption that ‘demonetization’ will achieve its goal of curbing the black market in India. It’s not happening and the economy is suffering as a result, a trend that the bank says could last to the first quarter of 2017 and beyond.
Moving to cashless society benefits the banks, as non-performing loans are problematic
What is the primary goal of the demonetization of India? To listen to official sources, and here a tale of the need to reign in the black market, terrorist and criminal activity along with tax evaders and counterfeit currency. They did this by using the ‘element of surprise.’
On the day of the US presidential election, Indian Prime Minister Narendra Modi announced his nation was banning more than 80% of its cash currency and a series of logistical nightmares and outrage among its citizens followed. Those holding common notes are being told to exchange their cash for what they tout as a more secure system.

This post was published at FinancialSense on 12/13/2016.

India’s Anti-Cash Modi Liberates the Rest of Us

India’s Prime Minister Narendra Modi is just another political hack. Like politicians in general, he does not understand economics. He does not understand the law of unanticipated consequences. He does not understand that government is dumb.
On November 8, he unilaterally and without warning declared the two highest value paper currency units obsolete: the 500-rupee ($7) and 1,000-rupee notes ($14). They will no longer be money in 50 days, he announced. That will be on December 28.
These two denomination bills constituted 86% of the nation’s currency.
To turn it back into currency of value, India’s currency holders most go to a bank and exchange it. But 600 million Indians have no bank accounts. This was a minor detail in the mind of Modi. He thinks of himself as a big-picture guy. Details don’t matter to him.
Across India, banks ran out of the official replacement currency. The ATMs stopped working.
This law supposedly is aimed at income tax cheaters. Yet this is a nation in which 95% of the population does not file tax returns. Tax cheating? Really? And I am to understand that the best way to stop tax cheating is to annul 86% of the currency? Tell me more!

This post was published at Gary North on December 10, 2016.

The Currency Crisis In India Seeking Alpha Predicted Is Here

This article was submitted by Shubhendu Pathak, a finance professional working in the Bay Area. Past: Capital One Shubhendu earned his Bachelors (B. Tech) and Masters (M. Tech) from IIT Delhi, and MBA with a concentration in Finance from Emory University.
Seeking Alpha published my two articles Will India Be The First Domino To Fall?and You Can’t Just Invest On Hope in which I predicted a currency crisis in India. On November 08, 2016, Prime Minister Narendra Modi announced the demonetization of 500 ($7.5) and 1,000 ($15) rupee notes, which constitute more than 85% of the currency in circulation. These notes ceased to exist as legal tenders on the night of the announcement. People can deposit them in their bank accounts before December 30, but cannot withdraw more than $350 in a week.
The purported object behind this step is to get rid of high denomination currency notes that the government believes are hoarded by tax evaders and corrupt government bureaucrats. This might be a little difficult to digest for an economist. For one, the corrupt might not be smart but they are not nave to simply sit on piles of cash that don’t yield any return; it doesn’t take a rocket scientist to diversify. Secondly, there is a simpler explanation that an economist might relate to better, and which is backed by data (read my two articles); the government run banks in India have run out of money and this is a bank holiday.
Here is an excerpt from my first article published on August 17, 2015.
The crisis has begun and there are only two ways forward for the banks; they can either take money printing to yet another level or announce a bank holiday and force the depositors to take a haircut on their deposits.

This post was published at Schiffgold on DECEMBER 7, 2016.