Indian Economy: Bubble Bursts
Most under reported story this quarter has been the slide of the Indian economy. A nation which was getting used to 9% growth rate, is suddenly confronted by a 20% devalued currency, uncontrollable inflation, out of control fiscal deficit, severe threat to balance of payment account, most corrupt government, complete breakdown of parliamentary function, populist measures at tax payers expense, negative industrial production, hyper real estate inflation due to black money, sky rocketing USD borrowing cost for Indian firms, bankrupt national airline, bankrupt state oil company (effectively) .. the list is endless...
Indian investors...BRACE FOR IMPACT. This is the perfect recipe for a looming hyperinflation due to significant devaluation of currency and rapid evaporation of foreign investor money.
Those who believe above is exaggerated, please take a look at 1997 Asian crises. All ingredients are perfectly brewing the curry for disaster. The only thing saving it from an "apocalypse tomorrow" is Reserve Bank of India's foreign exchange reserves. The day the populist government forces RBI to use this reserve to calm fx markets down, that is the day investors need to start shorting the Indian market in size.
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