Disclaimer: Only pun intended
Before I had started working on the Bi-polarization theory, I always found it difficult to explain the patterns that I experienced in daily life. Why would we continue to sway between our moods of hope and despair? Why do markets fall and rise? Why do some people always make money and some always lose?
What happened yesterday proved to be a classic example of the bi polar effect. The ex RBI governor Dr. Subbarao made way for the Raghuram Rajan who also happens to have immense international experience. There are multiple conspiracy theories that run in our circles regarding the entire change but I would keep that for another day. The entire shift was such a big media event, it surprised me to see how the people had become so obsessed with the personality rather than the actions and what it really meant in the long run, they forget basic mathematics.
Unfortunately this is the basic principle of bi-polarization. People tend to attribute bad times to the person who seems most associated with it, even if it was never his/her fault to begin with. For all you know, all the good things that person might wrongly get attributed to his/her substitute which brings us to the core reason behind the existence of the bi polarization. Bi-polarization exists because we don't want our brains to work and we are just too lazy to think and find solutions to problems. We just want some one else to guide us out of a crisis. Even if the advice/guidance turns out insignificant, it still gets a better audience than what the original guy would have got even if he made sense.
RBI decided to offer a window to the banks to swap FCNR (B) dollar funds, mobilized for a minimum tenor of three years and over at a fixed rate of 3.5 per cent per annum for the tenor of the deposit. Another measure included swapping dollar funding at 100 bp below the market levels. Although the problem here gets deferred temporarily, thereby reducing the panic in the market, this has hardly solved the problem. The money that comes in now has to be returned back so in the whole scheme of things, there are no extra dollars in the system. The most important question- who funds the loss here. Does it mean we are throwing away money to the foreigners just so that the rot in the system gets more time to survive?
Probably Dr. Subbarao understood the fundamental problem here, that you can't clean a system without purging it out. You need to clean it inside out.
Before I had started working on the Bi-polarization theory, I always found it difficult to explain the patterns that I experienced in daily life. Why would we continue to sway between our moods of hope and despair? Why do markets fall and rise? Why do some people always make money and some always lose?
What happened yesterday proved to be a classic example of the bi polar effect. The ex RBI governor Dr. Subbarao made way for the Raghuram Rajan who also happens to have immense international experience. There are multiple conspiracy theories that run in our circles regarding the entire change but I would keep that for another day. The entire shift was such a big media event, it surprised me to see how the people had become so obsessed with the personality rather than the actions and what it really meant in the long run, they forget basic mathematics.
Unfortunately this is the basic principle of bi-polarization. People tend to attribute bad times to the person who seems most associated with it, even if it was never his/her fault to begin with. For all you know, all the good things that person might wrongly get attributed to his/her substitute which brings us to the core reason behind the existence of the bi polarization. Bi-polarization exists because we don't want our brains to work and we are just too lazy to think and find solutions to problems. We just want some one else to guide us out of a crisis. Even if the advice/guidance turns out insignificant, it still gets a better audience than what the original guy would have got even if he made sense.
RBI decided to offer a window to the banks to swap FCNR (B) dollar funds, mobilized for a minimum tenor of three years and over at a fixed rate of 3.5 per cent per annum for the tenor of the deposit. Another measure included swapping dollar funding at 100 bp below the market levels. Although the problem here gets deferred temporarily, thereby reducing the panic in the market, this has hardly solved the problem. The money that comes in now has to be returned back so in the whole scheme of things, there are no extra dollars in the system. The most important question- who funds the loss here. Does it mean we are throwing away money to the foreigners just so that the rot in the system gets more time to survive?
Probably Dr. Subbarao understood the fundamental problem here, that you can't clean a system without purging it out. You need to clean it inside out.
No comments:
Post a Comment