Uncle Scrooge's Economics

The year was 2008 and the day was 29 August. John turned on the TV and saw all his life savings vanish in a matter of time. The S&P 500 (US index) had crashed 20% and hit a lower circuit. In the days to come, the markets fell by 69%. The 2008 crash is still considered to be one of the worst crashes in the history of markets. Why is it called so? What led to such a horrific crash? Why, Mr. Buffett says that the derivatives are products of mass destruction? Who should be blamed for this crash? Too many questions and too few answers. In this blog, we are going to discover the dark and greedy side of the markets and the people who fuel this greed. After reading this, you might give investing in the markets a second thought, but trust me, there are valuable lessons as well. Before we begin, a quick disclaimer. Because the crash was so complex, this blog is going to be a long one and a bit boring. The exact combination you all crave. Let's dive in.  After the dotcom bubble of 2000, A...

Since 2020, India is pushing hard to decrease the trade deficit via promoting exports. We all panic when the trade data arrives and later, we forget. But one thing no one ever thinks of is who pays for the trade deficits which fall into billions and billions of dollars? I know Santa is definitely not the one who is going to pay. Then who?  None other than, us. That's right. We, the taxpayers of India. We, the middle class of India. A shocking data recently showed up on my desk. 64% of the Rs 14.83 Lakh Cr of GST collected by the GOI comes from the bottom 50% of the population. Only 3% of the GST collection comes from the top 10%. Either the top 10% has halted their consumption or they have found out a way to evade GST as well. But today, let's talk about the trade deficit.  When a country imports more goods than they export, a trade deficit is created. Vice-versa, a country having a trade surplus exports more goods than what they import.  Clashes between the Indian army a...

Recently, Mr. Gautam Adani made an appearance on the Rajat Sharma show. In that he made a few statements which highlighted the courageous attitude with which he has run the business and has placed it among the Fortune 500 companies. It is not easy to clone what he has done. Among all the available sectors to start a business, he entered those which had the highest amount of risk and capital involved. Mr. Adani started his journey with the port business. It was then that he realized what India imports and exports and that's how he came to know about his next investment.  Over the last 35 years, the Adani group has entered into Infrastructure, Cement, Ports, Airports, Coal, Electricity generation and transmission, Mining, FMCG, Telecom, Power distribution, green energy and Gas distribution. I don't think I need to tell you all how capital intensive all of these sectors are. I mean, just to give you an idea, if you were to start a cement business from scratch, the minimum capital ...

  First of all, wishing you all a very prosperous and a new year filled with happiness. I hope everything that you have planned for 2023 comes true.  I might have started the blog on a happy note, but I am going to spoil the mood. The topic for today's blog is one that not only bothers our pockets, but also affects the pockets of our economy. You might have guessed it from the image above. Yes, we are going to talk about Rupee depreciation.  For those who don't know what currency depreciation is, it is when the value of the home currency decreases as compared to the foreign currency. In short, it is when the value of the rupee decreases as compared to the foreign currency. We experience a decrease in purchasing power when a currency depreciates. But why am I talking about rupee depreciation at the beginning of a new year? In FY 2022, Indian rupee depreciated 10% against the dollar. This isn't the first time that the Indian rupee has depreciated against the dollar. In fact...