Tuesday, January 29, 2013

Subbarao blinked finally - 1

The tug of war between government and RBI ended today as RBI governor D.Subbarao conceded by lowering the Repo rate by 0.25 even CPI is over 10% and WPI is over 7%.   Whether it is pressure, threat, coax, cajol or whatever from Chidambaram, governer obliged with the rate cut and this is not at all good for the common man. Subbarao ditched the common man for real estate mafia.

. Normally with every review RBI used to talk about inflation only. Now they understood this is not only about inflation. The mismanagement started affecting CAD and Rupee value also. One need not to be economist to understand all this basic things. Interestingly they seems to read my blog and wrote something about the fall in the savings rate in India.  RBI included all these things in their review. But instead of raising the interest rates they reduced.

Now let us see what would happen next:

1. As I have been maintaining, the 0.25% is not going to save the ass of corporate mafia. The real estate mafia has to pay for the sins. I do not think any body would go and buy apartments or flats only for 0.25% or 0.50% rate cut. People should have real money or jobs. With new jobs are hard to come by I am not sure.

2. A well known Bangalore builders defaulted in corporate debentures. Hopefully a start is made. I love to see at least 50 medium builders to bankrupt to start with. These idiots are thinking they have land bank which is valued more than the loan amount. .They value all these land banks at CMP at which rate nobody buys :) so I don't believe their price. Let us see how the creditors get back their money.

3. Chidambaram has placed all his cards on the table and forced RBI also to put their best foot forward. Since they cannot do anything more to pep up, I think they will run out of steam.

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