Are we ready for another Uncle Sam?

Introduction

There were things that we all knew. Before getting to the genesis of the whole USA (Under Skirt Adventure) business, let us get our facts right. USA’s current deficit is $14.398 trillion and it has to pay $500 million as interest every day. This debt sharing works out to $121957 per family. No one knows how USA has benchmarked the meaning for a family. A society which is famous for MILF, Naughty America and BangBros, how does one define a family per se?

Hail Uncle Sam

USA has a Debt Ceiling Act through which it can increase its debt cap by passing it in the Congress. Earlier the debt cap was raised to $14 trillion. Since, it has been breached; US is in a mood to increase it by another $3 trillion. The justification of this rise is given by the fact that they can pay back $2.4 trillion of that money, if they raise $3 trillion. It’s like when we have drunk 6 pegs of Vodka already and are on the brink of getting out. Yet, we still want to drink more. Thus we borrow money and drink some more and forget about returning the money when we come back to our normal senses. Guys, get out the Hangover2 soon!

Before stacking up all blame on USA, let us get back to history on how USA became such a powerful country. Founded in 1776 (as was Naughty America!!) a group of docile people pushed out the aborigine Indians and made it a Centre of Excellence. Years passed. After the First World War, a standard for money exchange became the need of the hour. Many companies came up with Gold as an answer, while USA went a step further and fixated a value for Gold in terms of dollar - $35 per ounce of Gold. Things spread slowly and international trade began to be done in Dollars. No one questioned the reason why it has to be done so, because they equated gold to dollars and no one questioned them the rationale behind the quantification. And why didn’t anyone question, was simple enough.

Games they play

Every World Bank President till date has been an American and USA has 17% quota in its Senate. And the minimum vote share required is 85% for any loan to be approved. Why would anyone go against the US, questioning their rationale? Dollar out of US (World Bank, IMF) flow into other countries, while other countries buy U.S Treasury Bonds (US’s euphemism for loans), US dollar starts to fall, while other countries try to protect the dollar. What is US doing?

In 1971, our Watergate hero Richard Nixon came out with a brilliant idea that the dollar will divorce gold. What he meant was dollar was just a currency from thereon with no value to back it up - Simple paper, worse than a Zimbabwean Rand. One incident after another, USA started feeling the pinch. S&P downgraded it from AAA to AA+ (Let us not laugh, we are a bloody BBB-). And the reasons for their rational behavior are as follows:

1.      Unemployment rate was at 9.2%. Approximately 14 million people were unemployed which meant that the government has to spend on Social Security, a concept unheard of in India.

2.     Long wars in Iraq and Afghanistan, which meant that they had to spend on military expenditure. Is this the reason why their presence in Libya is very limited?

3.     Expenditure on medicare.

4.     With an IQ of 125 (91 is a false news), George W Bush came up with beneficial tax cuts in 2001 and 2003. The years being specific because, in those respective years they went on wars with Afghanistan and Iraq.

5.     Because of all these expenditures, USA is not able to invest in its physical and intellectual infrastructure which is hurting them a lot.

The current US deficit is around $1.3 trillion and everyone is watching on how the situation could improve. The dollar cycle will go on until the world perceives that the dollar has no value and a day will come when someone can take advantage of it. Who would it be?

How is India in a position to take advantage?

We are at 14^th position in terms of exposure to US debt – $41 billion, while our close friend China tops the chart with $1.5 trillion. But the Indian culture of consumption for satisfying needs than for luxury has insulated us very well. We are very protected by our economic culture of spending today’s income for tomorrow’s expense. There are a few countries like PIIGS (Portugal, Ireland, Italy, Greece and Spain) who are caught in the deficit spiral by spending tomorrow’s money today. Greece actually pledged their “Toll revenue” to get financial aid and the rest is history.

India has some positives to look for such as the decline in oil prices once the dollar depreciates, which will decrease the interest rates; increase in FIIs, etc. While there are a few negatives which include slowdown in FDI, pressure on Rupee to appreciate in turn affecting domestic markets as imports become cheaper, exports taking a blow due to dollar depreciation, we are, still, there to take advantage of the situation. But how? With fasts and incapable governments?

We are here to see a promising future when things outside are in a turmoil. There are few countries in the world which can actually turn things around. India being one among them can seize the situation and turn it around completely, if she wishes to!!

(With inputs from Anoop Sherlekar)

First peg of Bombay Life..

Everyone was hooked onto their new laptops. Some were installing software, others skyping and the rest on facebook doing nothing. And that was my n^th call from Suhail to get ready to step out of the campus. When someone asks a question like who will be ranked the last in the class, hardly any hands shoot up. Everyone thinks that they won’t be the last, yet there is someone among them who will come last. Applying the same logic, no one was ready by 8 PM, yet everyone wanted to leave by the same time. In small groups of 3-4, we started for Kanjur Marg station, the nearest to the campus. It was indeed nearest when there is no traffic and one can easily take an auto to reach. But, talk about walking the whole distance, you would find no takers for it. Yet against all odds, 15 out of the 16 pseudo-intellectual kids made to the station by foot (myself, Dhruv, Kartik, Kaashi, Chotu, Parthiv, Nikhil, Boro, Debshree, Reshu, Hemangi, Tanya, Rajeev, Vijay, Suhail and Nisan). Vaibhav was smart enough to reach the station well in advance and paid the penalty by buying extra tickets (None returned the money yet, so eventually he paid for everyone’s travel). To add interesting information, there were a few guys at the station who winked at him, mistaking him to be a member of IITB’s “Saathi”.

The slow train to CST made its way into the second platform of the station. With 45 minutes chit-chat, we reached CST. The kids were so hungry that they did not even spare a stale samosa. They hogged down until the last tiny crumble, while the confusion of who is going where were sorted by big shots. As it happens in all the board room meetings, no conclusion was reached and the whole lot headed to Leopold’s, barring two mariners who went to the Marine Club. And to our surprise, Leopold’s was ready to accommodate a 15-member group without any fuss. Boys in the house were hell bent on getting drunk, while girls in the house just wanted a break out loose.

After placing the initial orders of beer towers, steak pasta, iced tea, burgers and coke, the first toast was raised for the first weekend in a month. The past month was strenuous like never before. The kids felt like the mayonnaise sauce that squeezes itself out of the tightly packed grilled buns. Once the boys started tilting towards the higher side, the dissertation on “how to identify Indians hailing from different parts of India based on a single word “B****C**D”” started. The good thing about being in a delightfully high company is that, one can easily reach a conclusion. It is quite true that great minds work cohesively when the right kind of motivation (beer) is provided.

One can’t keep the Punjabis in the house out for too long, without them singing their favorite numbers. With 7 Punjabis in the house, one has to oblige their wish to sing, even though the Leopold’s’ waiters thought otherwise. Then came the highlighted phase of the song session – we picked up common songs in Hindi and Tamil and thanks to ARR, we had quite a few numbers. Until then 5 beer towers were gulped down by 7 of them and 3 Coke cans by me. With a vote of thanks by “Bhaag DK Bose”, we exited Leopold’s and headed for Nariman Point.

One word – Absolute beauty. Moonlit Arabian Sea, waves crashing the rocks on which we were sitting, talking about places to visit and things to do, each of us actually felt the pulse of the moment. Knowingly or unknowingly we connected back to our past, thinking about our personal best times, sinking in the unrealistic reality of living life the way we always wanted to. The erstwhile Mumbai police came and warded us off as there were indications of high tide and that’s when it started drizzling. Bombay, chicken, beer (read coke), beach and rain with no deadlines to meet – A few of the blissful moments in life. We settled down along the rocky shore singing songs once again, this time with the aid of mobile phones.

Once the mood of the group changed to Back Street Boys, I, Kartik Calling Kartik (Kartik Dua), Debu (Debshree Buttercharjee), Hooda City Centre (Reshu Hooda) and Gullu (Vaibhav Gulati) left for a walk along the shore. Sensing the ramblings in our stomachs, we set out to pay a visit to Haji Ali Juice Centre. Apart from the Queens Necklace, the other roads in Bombay are also studded with lights, buildings and well-lit showrooms of Porche and Aston Martin. Disappointed in finding out that the juice centre to be closed, we headed straight to Shalimar Restaurant in Masjid. After having fulfilling Faloodas, we walked to the Masjid station to catch the first local train back to Kanjur Marg. En route, we discussed about why Bombay never sleeps (barbers were busy shaving at 4 am), existence of God, aliens and a lot other trivial stuffs. We reached the campus by 0515 am and hit our beds and for the first time in a month we had no idea of when to wake-up to reality. Cheers!!!