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Archive for May 18th, 2009

Singh’s ‘Game Changer’ Win to Unlock India Economy; Shares Soar

Posted by WARREN MOSLER on 18th May 2009

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Make room for another billion consumers increasing their resource consumption:

India Stocks, Rupee, Bonds Surge on Congress Win; Shares Halted

by Pooja Thakur

May 18 (Bloomberg) — India’s benchmark stock index jumped
a record 17 percent, bonds rose and the rupee gained the most in
two decades after Prime Minister Manmohan Singh’s Congress Party
won nationwide elections.

Share trading was halted for the first time ever after the
Sensitive Index, or Sensex, breached a daily limit set by the
market regulator. The rupee climbed 3.1 percent against the
dollar and the benchmark bond yield fell 16 basis points, the
biggest decline in a month.

“Markets are euphoric,” said Rahul Chadha, the Hong Kong-
based head of Indian equities at Mirae Asset Global Investment,
with $46 billion in global equities. “The focus by federal and
state governments on development will lead to a structural re-
rating of India.”

The ruling Congress party won the most seats since 1991,
when then-finance minister Singh abandoned Soviet-style state
planning and introduced free-market reforms that have helped
India’s economy quadruple in size. With almost twice as many
seats as the main opposition, Singh, 76, may further reduce
barriers to foreign investment in insurers and retailers, plans
that had been frustrated by communist lawmakers.

Bharat Heavy Electricals Ltd., whose turbines and
generators light up three of every four homes in India, leaped
33 percent. The Congress victory will clear the way for the
government to proceed with billions of dollars in pending orders
and should also give foreign investors confidence in the country,
Bharat Chairman K. Ravi Kumar said in a telephone interview.

Kamal Nath, trade minister in the outgoing administration,
said in an interview the government “should aim” to boost
growth to 8 percent in the business year that started April 1.
The $1.2 trillion economy is expected by the central bank to
expand 6 percent, compared with average growth of 8.6 percent in
the previous five years.


Posted in Articles, India, Political | 6 Comments »

Weber Says ECB Monetary Policy Increasingly Effective

Posted by WARREN MOSLER on 18th May 2009

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They wouldn’t dare give the rising budget deficits any credit.

Weber Says ECB Monetary Policy Increasingly Effective

by Christian Vits

May 18 (Bloomberg) — European Central Bank Governing
Council member Axel Weber said the bank’s monetary policy is
increasingly stabilizing the economy.

“Monetary policy is contributing significantly to the
stabilization of the economy and its effectiveness is
increasing,” Weber, who heads Germany’s Bundesbank, said in a
speech in Dusseldorf today. After a “massive” reduction of the
ECB’s benchmark interest rate, the present level of 1 percent
“is appropriate in the current environment,” he said.

In additional to cutting its key rate by 3.25 percentage
points since early October, the ECB has announced it will buy 60
billion euros ($81 billion) of covered bonds and extend the
maturities in its unlimited refinancing operations to 12 months.

Weber said providing banks with as much money as the need
is “of particular importance” and extending the maturities of
the loans “certainly will push the yield curve even lower.”
The plan to buy covered bonds is in line with the ECB’s strategy
of supporting the banking channel, he said.


Posted in Articles, Deficit, ECB, Government Spending, Political | No Comments »