Category: Contemporary Topics

Interest Rates: Effect on Consumption and Savings

Interest rates have been used as an important policy tool to prevent inflation by Central Banks across the world. They adjust interest rates to correct supply and demand imbalances and hence solve the menace of inflation in their respective countries. A central bank increases interest rates when inflation is higher than what the central bank more »

Indian Growth: Corporate earnings and Government revenue

In continuation from the article Indian Growth: Transportation Sector Data for the transportation sector in India points towards a steady recovery in the past two years, with a pronounced recovery in one of the most important sectors of the country, the next sign of a recovery would come from an improvement in revenue growth for more »

Indian Growth:Transportation Sector

India overtook China to become the worlds fastest growing major economy in the year 2015. For the year 2014-15, the country grew at a rate of 7.3%. The estimates for the year 2015-16 point to an even better growth rate of 7.6%. In an otherwise dull global economy, India is a bright spot. India: The more »

Iron and Steel Market

Starting 2013, the world has seen a dramatic fall in steel prices. The so called commodity super cycle which began at the start of the millennium has come to an end. Steel producing firms are frantically trying to reduce capacity since steel prices which fell by nearly 35% in 2015 no longer justify production. Iron more »

Chinese Rebalancing

With an annualized economic growth rate of over 9.5% per year for the last three and a half decades, China’s growth story has been dubbed nothing short of an economic miracle. But, in recent years there has been a lot of talk of the “Chinese Rebalancing” i.e. shifting the Chinese economic growth from being investment more »

Crude Oil Market

In the summer of 2014 crude oil cost $105 per barrel, it is 2016 now and a barrel of crude oil costs around $40. This is a near 60% drop in oil prices over the two years. Low crude oil prices are causing many firms to stop production at their oil rigs since the low more »

Collateralized Debt Obligations

The term Collateralized Debt Obligation (CDO) is often mentioned while talking about the financial crisis of 2008, but not many of us know how a CDO functions or is created. The first CDO was issued by Drexel Burnham Lambert Inc. in the year 1987, they were initially issued using corporate bonds or bank loans as more »

Goods and Services Tax

The Goods and Services Tax(GST) is a form of indirect taxation. This is a tax on final consumption i.e. people pay this tax at the final point of purchasing goods and services. Countries such as France, Australia, Singapore and Canada follow this form of indirect taxation. Since 2006 India has been making attempts to adopt more »

Negative Interest Rates

On 11th June 2014 the European Central Bank reduced the interest paid to commercial banks on deposit to -0.10% i.e. it started charging commercial banks for depositing money with the central bank also known as Negative Interest Rate. In the following months the central bank cut interest rates further into the negative territory and as more »

Quantitative Easing

In November of 2008 the US Federal Reserve started a process called Quantitative Easing. This caused the balance sheet of the Federal Reserve to swell from $700 billion to about $4.5 trillion in October 2014, when it ended its program. So what is Quantitative Easing? Quantitative easing is when the central bank of a country prints more »