Random thoughts...

Sitting in the LRC, I am trying hard to concentrate preparing for my "Pricing" finals tomorrow... I am beginning to get the feeling now that I am going slightly off the boil... I dont know if its placements thats distracting or its just the amount of work built up over time... I hate to think it is the amount of work, for in my belief, to some extent at least, it is hyped up, thanks to the mass of 200 of us saying the same thing again and again... its a mindset you cannot escape once you are in here but would do well to escape if you can...

I havent written about many things that have happened in the last two weeks... One, was Raghuram Rajan's visit... I had to drop his course midway through as I simply could not take the load, given the leadership summit work that was going on simultaneously... But he did address an audience comprising us, alums and some business folks from hyd about the future trends in global economy... Some recollections:

The US economy is recovering but we do not see a corresponding increase in employment... Why? Because there has been a structural change in the emplyoment scenario in the US... What typically happens in an economic cycle is that, during the downturn, industries, especially manufacturing fires labor and when the economy recovers, hires them back... But of late, manufacturing in the US has become do high tech that, these fired workers are no longer need to be hired back, even though the economy is looking up... In short, the lack of rise in employment in the US is more attributable to this than to the job flight to India. Japan is showing signs of recovery but its estimation of deflation, or for that matter, inflation is not perfect due to which, the signs of recovery have to be read with caution. There is a likelyhood that we will see personal consumption going up, which is certainly a positive sign of growth and recovery... Japan has tradionally been a export strong economy and will continue to be so... Europe is yet to get out of the slump and is probably going to find it the toughest, though the EURO is showing strength... The US dollar is weakening and the US deficit is a worrying factor in the long run... Given this and the fact that the returns on US treasury bonds is hoveing around 2%, it is quite possible that countries, which are still saving in the greenback may shift to the Euro or other currencies... This will be an interesting observation with potential trouble brewing for the US... But US personal consumption is going up and we may also see the deficit being serviced by the economy improving with the phase of personal consumption going up being followed by investments... For India, the primary focus area has to be infrastructure... China spends approx 40% of gdp on infrastructure and we here spend 2% (if i remember this right)... The focus on infrastructure is critical to the future of the India... Also, consistency in regulations and policies is also required to improve investor confidence, which is positive now... Its can be grown to higher levels by consistent policy statements from the fin minister... For infrastructure development, one or two projects like the golden quadrilateral will not suffice... Rural infrastructure is in bad shape and the government can use innovative methods to tie up with the private sector to finance improvement of the rural infrastructure... While the money can come from the private sector, the risk accompanying such investments can be covered by the government through consistent policy...

There were also interesting discussions on what to do with the huge forex reserves in India and what will be the implications of a currency deregulation of the chinese Yuan... Overall, it was two hours of great "Gyaan" :)