The downturn is getting worse but politicians make merry!

The economy is showing new weaknesses almost every day and the pain is just starting to be felt. I have been wondering how the return of Indian workers abroad will affect the country's economy. Those workers have been sending home billions of dollars every year, substantially adding to our foreign exchange kitty and also boosting the spending power of relatives back home. 

Now with that money flow drying up and the workers back home without work, it could be a double whammy for the Indian economy.

States like Kerala, with virtually nothing to show for industrial production or agricultural production, are going to be the worst hit.

Sadly, no one in the government or outside seems to have realized the impact this slowdown will have on the economy. Things are going to get a lot worse and there seems to be no concerted effort to mitigate the aftershocks. 

The stimulus packages that are being talked about and offered are going to be just drops in the ocean, I feel. 

Today the father of a guy doing his executive MBA from a top business school told me placements have become an issue. That surprised me, because I had thought that there would always be top B-schools. And that is also an indicator or how deep the rot is.

Unfortunately, the politicians are still playing politics and have little time for the common man. Why should they worry anyway: the more suffering there is the more opportunity for them! 

Indian economy: a lot of denials and some crooks

So Ramalinga Raju of Satyam actually siphoned off money from the software services giant, contrary to what he said in his open letter to the company's Board before his arrest. Well, I had all along held that while Raju might have been doing a con job, he was unlucky in getting caught and there are bigger villains in corporate India who are not caught because they are smarter. I still hold to that view.
That apart, I think the economic scene is going to get much worse and the worst is yet to come. I still can't understand how analysts and thier ilk can say Indian business is going to do well in 2009. I suspect this is an attempt to fish in murky waters. A stockbroker recently told me how he had a difficult time fending off people who approached him wanting to invest in stocks, even with borrowed money. And mind you, these were just ordinary lower middle class people with average incomes of 10-12k per month. With their being no dearth of people willing to be taken for a ride, I am not surprised at the pundits prophesying that India will rock in 2009 while the world economy will crumble!
And here is a NYT article about how investors may be losing patience with Google and Microsoft. Yes, the same New Economy giants who many other companies are hoping to model themselves after. And here we are talking about a rosy picture for the economy.! View through rose-tinted glasses, I would say.

Can Obama manage those expectations, and those forces of change?

Finally Barack Obama is president of the United States. A judging by the crowds that attended his inaugural, it seems at least some Americans think the new president has some sort of magic wand to pull the country out of the many problems it is mired in currently, and most of which are being blamed on George W Bush.
It evokes in me memories of the first time Manmohan Singh became India's Finance Minister. The Congress had promised to roll back prices in the run-up to those elections but once he took over Mr Singh famously said: "I do not have a magic wand (to roll back the prices!)".
Well, at least Mr Obama did not say he had a magic bullet for all of America's problems but a lot of Americans and people in other countries seem to think so. The biggest challenge for Obama would be managing those expectations.
And Obama could be classified as a success or failure depending purely on how he manages those expectations, not on how he really performs on the ground.
Will the world change with Obama? I doubt so. The changes we are undergoing right now are so momentous and old solutions simply cannot work. Indeed, we may not realize it but these changes are so sweeping, they are not amenable to any solutions. My feel is they will run their course and trample over any force that is trying to channelize them, till they change the world order and society in hitherto unseen ways.
Will Obama be a victim of those forces, or will he be able to keep his head up?