Shabda Gyawali's Blog

Being a student of Economics.Many people ask me what is the difference between recession and depression? Well,I dont know the answer,but I have found an interesting article in the ECONOMIST Magazine ............ THE word “depression” is popping up more often than at any time in the past 60 years, but what exactly does it mean? The popular rule of thumb for a recession is two consecutive quarters of falling GDP. America’s National Bureau of Economic Research has officially declared a recession based on a more rigorous analysis of a range of economic indicators. But there is no widely accepted definition of depression. So how severe does this current slump have to get before it warrants the “D” word? A search on the internet suggests two principal criteria for distinguishing a depression from a recession: a decline in real GDP that exceeds 10%, or one that lasts more than three years. America’s Great Depression qualifies on both counts, with GDP falling by around 30% between 1929 and 19...

Yadav Raj Joshi KATHMANDU: Skyrocketing commodity prices have finally spurred the government into action. In a bid to curb the price-hike of essential goods, a team of government officials, police and consumer groups raided and sealed 13 warehouses owned by renowned businessmen storing foodstuff and grains here today. “We sealed 11 godowns belonging to Kumud Dugar located in Jadibuti of Koteshwor,” said Kamal Bahadur Thapa, investigation officer, Department of Commerce. The team discovered large quantity of food items — 15 brands of edible oil, five brands of rice, five types of pulses and wheat flour and maida — in storage facilities in Jadibuti. “The investigation is in progress,” said Thapa, adding that the exact quantity of sealed items would be calculated tomorrow. The raids were carried out as per the directions of a high-level committee headed by Dr Yubaraj Khatiwada. The committee was formed yesterday. The team also sealed the godowns of Paw...

Unlike many other countries,The worst economic and financial crisis after the great depression has not significantly affected Nepal's economy compared to those in Western hemisphere.Nepal's capital market is to small,this is one of the reason why Nepal's economy is insulated from the crisis,However,there are few sector which have been effect,namely inflow of remittances and tourism industry. I was reading an article in Harvard business review,and I came across a very interesting line in the article.The writer writes "The longer the recession linger in the developed world the more the trade between developing will grow" This line made me analyze the possible opportunities for Nepal.Asian economics specially our immediate neighbors are trying hard to decouple them self from the American economy. The foundation of the new economic model for these two giants are base on one main idea,which is boosting domestic consumption and relying less on export fo...

When the United States and China established diplomatic relations 30 years ago, it was far from clear what the future would hold. In 1979, China was still emerging from the ruins of the Cultural Revolution and its gross domestic product stood at a mere $176 billion, a fraction of the U.S. total of $2.5 trillion. Even travel and communication between our two great nations presented a challenge: a few unreliable telephone lines and no direct flights connected us. Today China’s GDP tops four trillion dollars, thousands of emails and cellphone calls cross the Pacific Ocean daily, and by next year there will be 249 direct flights per week between the U.S. and China. To keep up with these changes that affect our citizens and our planet, we need to update our official ties with Beijing. During their first meeting in April, President Barack Obama and President Hu Jintao announced a new dialogue as part of the administration’s efforts to build a positive, cooperative and comprehensive relations...

THE World Last week, World Bank Chief Economist Justin Lin warned in a speech that a surge in excess capacity world-wide could lead to a global "deflationary downward spiral." The Bank of Japan and the International Monetary Fund are forecasting two years of price declines in Japan, which suffered a serious bout of deflation in the 1990s because of a blowup in its banking sector and collapse in the real-estate market. China's consumer-price index was down 1.1% from a year ago, and its producer-price index fell 5.9%, according to China's National Bureau of Statistics from last week. INDIA India’s wholesale prices fell for a sixth straight week, suggesting the Reserve Bank of India (RBI) is unlikely to start increasing interest rates at a meeting next week. The benchmark Wholesale Price Index declined 1.17% in the week to 11 July from a year earlier after falling 1.21% in the previous week, the government said on Thursday. Prices retreated 1.61% in the first week of Ju...

I read a very interested op-ed by Federal Reserve chairman in yesterday's Wall Street Journal . In the article, Chairman Bernanke points out the various strategy The Federal Reserve with employee to tame inflation in the future. This article made me think,even though, deflation is a greater treat then inflation in United States right now.When people like Warren Buffet and Paul Krugman are advocating for 2ND stimulus package.Why are policy markers already drawing out plans -how to tighten monetary policy ? Uncle Ben ends his article writing "We will calibrate the timing and pace of any future tightening, together with the mix of tools to best foster our dual objectives of maximum employment and price stability" This ending statement gave me my answer.....Federal reserve is just doing its job.It's job is to control the flow of credit in the market,and be able to use the necessary tool to open the clogging or drain the overflow when needed. Ok..If that's the case,why...

"China is “flexing its muscles"

Mrs Clinton, on a five-day visit to the India ,said" There is a way to eradicate poverty and develop sustainably that will lower significantly the carbon footprint of the energy that is produced and consumed to fuel that growth.” Obama admistration has send it's secretary of state to embrace a low-carbon future in which the US-INDIA would work together to devise new ways of consuming and producing energy.Unfortunately ,India has rebuffed the appeal made by United State. Jairam Ramesh, India’s environment minister told Mrs Clinton that it does not make sense for India to cut down its emission,when India has one of the lowest emission per capita. India,along with China, has refused accept emissions caps,arguing that western world has pumped a century's worth of greenhouse gas into the atmosphere, didn't have to contend with such rules when it was industrializing.Why should India and China accept the law ,When it is their time to industrialized . Miss Clinton,I...

Hydro Power companies represents 4.34% of the total market cap of the Nepal stock exchange . An Investor is interested to buy stocks of a particular company,when the investor thinks that price of stock of the company will go up. These days in Nepal if people have little bit of savings then they prefer to buy stocks rather than saving it .Even though with very minimum FII and the global economic crisis ,Nepalese stock market is in the positive territory . According to the economist magzine NPSE one of the fastest growing stock market in the World. Being a student of economics and acquiring a little knowledge about financial market over the years. I am very skeptical about the Nepalese stock market and way it works . To be extact let me quote one of the Nepalese market analyst " The equity market is the biggest leading indicator for the economy, but in case of Nepal, NEPSE rarely connotes the reality" We all have heard the rhetoric about Nepal hydro power po...

Economists are scared about deflation,despite the massive stimulus from the government.On going Economic crisis has also ended the Regan-Thacher era of free market polices.many developing and developed nations are working towards creating a stronger regulatory entity to over look the market. But,In Nepal thing are different.Inflation is around 13.5 even though price are falling all around the world .I was listening to a radio talk show broadcasted in BBC Nepal.In the the program the guests have indicated the following reasons for the inflation. Lack of Political Stability Retailer cartel Lack of infrastructure Monopoly of the wholesaler Lack of competition among the whole salers Oligarchy in the retail industry -supported by the various political forces .

WB has ended its funding to Maoist combatants living in UN-monitored cantonments, citing that stakeholders in Nepal failed to convince WB´s shareholders that the assistance has been used as per the agreement. I think this is absolutely ridiculous.I agree, Maoist did not play by the rule,and the government failed to integrate the national army and the red army,but that doest not you stop the funding. Political situation of Nepal is already very vulnerable.If 19,600 verified Maoist combatants are deinded their pay checks,These fighters will leave the camps.The whole peace process will be jeopardize,And Nepal will be the newest member of the group of natons,who have lost a decade due to some sort of crisis.