Shabda Gyawali's Blog

By PETER S. GOODMAN FOR more than a quarter-century, the dominant idea guiding economic policy in the United States and much of the globe has been that the market is unfailingly wise. So wise that the proper role for government is to steer clear and not mess with the gusher of wealth that will flow, trickling down to the every level of society, if only the market is left to do its magic. That notion has carried the day as industries have been unshackled from regulation, and as taxes have been rolled back, along with the oversight powers of government. Faith in markets has held sway as insurance companies have fended off calls for more government-financed health care, and as banks have engineered webs of finance that have turned houses from mere abodes into assets traded like dot-com stocks. But lately, a striking unease with market forces has entered the conversation. The world confronts problems of staggering complexity and consequence, from a shortage of credit following the mortgage...

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KATHMANDU, July 31 - Mahabir Pun, 52, of remote Myagdi district in Western Nepal has won the Ramon Magsaysay Award, becoming the fourth Nepali national to bag what is regarded as the Nobel Prize of Asia. Mahabir Pun: Fourth Nepali bags Magsaysay Award The Board of Trustees of the Ramon Magsaysay Award Foundation (RMAF) on Tuesday announced Pun as one among seven recipients of the prestigious award for 2007. A press statement posted on the RMAF´s official web page said Pun is being given the Community Leadership Award in recognition to "his innovative application of wireless computer technology in Nepal, bringing progress to remote mountain areas by connecting his village to the global village." He will be conferred the award amid a function in Manila, Philippines, on August 31. "When good work is done, someone or the other does remember. I am happy," Pun, who was on his way home to Chitwan to meet his elderly mother, said over the telephone. Prior to this in 2...

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The protracted political instability is beginning seriously hurt the already troubled national economy. Given the failure to substantially increase exports to India, the trade deficit with the southern neighbor – with whom Nepal conducts almost 70 percent of its total foreign trade – has grown to astronomical figures. Economist Dr. Bishwambher Pyakuryal says the trade deficit with India is reaching almost Rs 100 billion. That apart, there has been a steady flow of capital out of the country, particularly towards India. All this has raised the demands for Indian Currency by many folds in the last few years. This trouble has become acute in the recent months. This growing demand for IC, according to Dr. Pyakuryal – who is also a board member of Nepal Rastra Bank (NRB), the central bank of Nepal – could even jeopardize the economic sovereignty of the country. In order to fulfill the soaring demands for IC, the NRB has been selling off the precious US dollars. Two years ago, the NRB had so...

NePal's economy is full of surprises. What can go well with a weak economy? Strong share trading of course! The stock market surges at record level despite of sluggish economy. The Nepali stock market registered exceptional jump doubling the market index in the summer of 2007. Can we explain any positive signal of economy that generates cheerful environment charging the 2007’s bull to a new high? We anticipate that the Nepali Stock market will continue to surprise us as it no longer represents the country’s economy. In 1912, the shipbuilders, Herland & Wolff had managed to convince the public that their latest creation, the Titanic, was unsinkable. Today, the speculators in Nepali stock market seem to be spreading the same propaganda. They advocate that current market trend represents investors’ confidence. They dismiss concerns about overpriced markets by citing a new economy where the old stock valuation rules will no longer apply. This is apparently inducing investors to dis...

On Thursday, December 6, the Bank of England (BoE), the RBI's UK counterpart, cut its signal interest rate by a quarter of a percentage point. In doing this, the central bank put aside its concerns on inflation pressures and trained its focus on the problem of slowing growth in the UK economy. The currency market had a niggling suspicion that this would happen and for about a week before this policy announcement, the pound sterling had shed quite a bit of its gains against the dollar (remember that in the short term, exchange rates are driven by capital flows seeking interest rate arbitrage; a lower interest rate thus discourages flows and pushes down the exchange rate). At first glance, it seems like a somewhat irrelevant detail as far as Indian financial markets are concerned. I would argue that there is more to it than meets the eye. Most importantly it is the first major blow against the much-touted 'decoupling' theory that has held sway in global asset markets. 'De...

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21 Nov, 2007, 1812 hrs IST,Swaminathan S Anklesaria Aiyar, TNN Oil is close to $100/barrel. Top financial companies (Citigroup, Merill Lynch) have lost tens of billions of dollars in the subprime mortgage crisis in the US. The US housing bust is spreading like a cancer across OECD countries. Half the economists in the US predict a recession next year. This might seem a portent of a world economic disaster that crushes poor countries like India. But, astonishingly, the health of the world economy looks not merely good but arguably the best in history. No wonder stock markets breaking records across all developing countries. We suddenly see a seismic shift in the entire structure of the world economy. For centuries, the high-income countries (led by the US) have dominated the world economy. The US has long been the locomotive of the world economy, pulling others along. Whenever the locomotive slowed, so did the wagons behind. Not any more. The task of pulling along the world economy has...

The World Bank on Thursday approved its largest ever support package to Nepal with US$ 253 million in grants designed to improve access to basic and primary education, enhance irrigation, expand rural roads, and improve living conditions, livelihoods, and empowerment among the rural poor, a statement by the bank said. The new support package doubles the amount of development resources currently available from the WB to Nepal. Briefing the Executive Directors of the World Bank Group and their Advisors, Praful Patel, World Bank Vice President for South Asia, said the grant programme intends to support implementation of a development programme that enjoys the backing of the seven-party coalition in their efforts to sustain the peace and to build the New Nepal. He said, "We all know that peace is needed for development. But in Nepal we also know that development is needed for peace. Addressing the root causes of the conflict will be key to ensuring lasting peace in Nepal. Rather than ...

Currency wasn't suppose to be some sort of magic bill which suddenly became valuable. Gold was valuable. If you exchanged a Car with gold, then it was actually an exchange to the full value of the gold. You paid the value of Car with the equal value of gold. Gold being valuable because of its unavailability and its durability. Iron gets rusted(so it looses its value) plus its too available, diamond is not fungible(one unit of cut diamond isn't of the same value as one unit of uncut, and once diamond is cut you can't remould it in something else). Basically Gold is the best option for the market currency. But soon it became too cumbersome to keep on carrying gold, plus you had to measure it everytime it was given to you, so some renowned private entities(usually the city goldsmith) issued signed tenders which said that if you bring that tender to him then he will back it up with that much amount of gold. That means if the tender said, 100 gms of gold, then upon the productio...

AS A cheerleader for the emerging India, a giant democracy with—at last—an economy to match, Narendra Modi is a disgrace. His six-year leadership of Gujarat, a booming western state, is widely cited as a paragon of economic management. But double-digit growth is not all that Mr Modi—who is seeking re-election in a poll due to begin on December 11th—is alleged to have orchestrated. There is also the small matter of 2,000 murdered Muslims, victims of a 2002 pogrom carried out by his Hindu-nationalist followers with the collusion of Gujarat's bureaucracy and police. This week the widow of a Muslim politician called Ahsan Jafri, whose limbs and genitals were hacked off and the rest of him burned alive, was due to file a petition in the Supreme Court, accusing Mr Modi of mass murder. There is little justice for Muslims in Gujarat. Only eight people have been convicted over the pogrom, mostly in neighbouring states. In Gujarat, some 2,000 cases remain pending. A small matter, however, is...

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Finance Minister Dr Ram Saran Mahat Thursday presented the interim government’s budget estimate of 168.99 billion rupees for the Fiscal Year 2007/08. Presenting the budget estimate in the legislature parliament, Dr Mahat said free and fair election to constituent assembly election, peace and security, poverty alleviation and infrastructure development would be given top priority in the new Fiscal Year. Of the total budget, Rs. 93.74 billion has been earmarked for general expenditure and Rs 75.25 billion for development programmes. The government aims to manage Rs 99.60 billion from current source of revenue, Rs 27.47 billion from foreign grants, and around Rs 17.37 billion from foreign loan. The estimated budget deficit this year will be around Rs 24.56 billion. The budget is higher by 17.4 percent as compared to total allocation of Fiscal Year 2006/07 and 28.2 higher than the revised estimate of the same period. The government has earmarked Rs 3.5 billion for the constituent assembly ...