What the heck is a double dip recession?

For the last several months, the phrase “double dip recession” has been doing the rounds. The expression continues to roll off the unctuous tongues of analysts and economists. It appears in articles authored by Nobel laureates on where the US and/or European economies are headed. But what is a double dip recession?

I had a vague idea that it had to do with two back-to-back recessions. But I wasn’t entirely sure. So I decided to educate myself. And having read up a little on the subject, I thought I’d do my bit to illuminate others.

A double dip recession is when there is negative growth in GDP (of a country) after a quarter or two of positive growth. Typically, the terms refers to two recessions separate by a relatively short recovery. Central banks in emerging markets are walking a tightrope between the need to keep inflation at a reasonable level (say 5%) and the growth imperative. In developed economies, interest rates are already near-zero- so capital is moving to economies where they earn a positive return. From a GDP growth perspective, the developed economies are almost stagnant (some are showing negative growth) so jobs are being lost while new ones are not being created. This leaves little wiggle room for taking hard political decisions such as cutting subsidies (and hence, deficits). And when countries like France and Germany themselves start feeling the pinch, their willingness and ability to support a Portugal or a Greece will reduce. The consequent unemployment unleashes a powerful socio-economic backlash that will also have political ramifications.

Economists are still not sure if even the US and Europe are going to end up in a double dip recession. But that is just a matter of semantics. Irrespective of the nomenclature, it is clear that the global economy is too interconnected for anyone to accurately predict how it will pan out. There are simply too many moving parts.

Reducing corruption or referendum on Lokpal Bill?

Over the past few months and weeks, the process of agitation begun by Anna Hazare has snowballed into a national movement. Across India, citizens are joining his team in the thousands. As a citizen of India, I completely support the need to act urgently against corruption. Robust debate on who all should come under the ambit of such a bill and how best to deter corrupt practices is not just desirable but also critical. But I fear that the ongoing gamesmanship between “Team Anna” and the government has lost sight of the central issue, viz. rooting out corruption from India. The movement seems to have morphed into a “my Lokpal Bill is better than yours” kind of campaign or referendum. This takes away attention from the central issue.

Looking for good quality content in English?

Cash remains king. But to get your customers to buy your products and services so that you generate those cash flows you need good content. You wouldn’t hire someone whose resume is full of errors, would you? After all, not only do you have to be good, but you also have to be seen to be good. Then why risk poorly written copy shape how customers and prospects perceive your company and its offerings?

If you’re looking for well-researched, logically organized and crisply written content in English (or just want a document proofread to keep the Gremlins away), send me an e-mail at anandkrishna65@gmail.com. We can also edit or rewrite your copy to give it more zing or make it flow better. Most general topics and business-related subjects are fair game. Our output will be in line with your preferred “tone” (businesslike, conversational, humorous etc.) and language preference (US, UK). And yes, we can blog and tweet on your behalf as well. Not convinced… yet? Try us out. Then decide for yourself.

Cassandra at work

The blame game for what caused India ceding its number 1 rank in test cricket to England will begin in real earnest very soon. So I thought I’d list down a few reasons and set the ball rolling…. I invite you to take this short poll to voice your opinion.

The downgrading of America’s credit rating

Financial profligacy can’t go on forever. Even in the world’s largest economy. That’s essentially the message that Standard & Poor’s has delivered to the world by downgrading US credit rating from AAA to AA+. It’s not the end of the world. But this action will mean that the US will have to pay higher interest rates on its borrowing. In turn, this means costlier funds for individual American borrowers- whether credit cards or home loans and so on. And because we live in an increasingly inter-dependent global society, this re-rating will adversely impact the cost of borrowing of countries that already are seen to be more risky than the US. And that very much includes India. On the flip side, though, it might make Indian instruments more attractive (or less unattractive) to foreign investors. And that might herald an inflow of foreign capital into Indian stock markets.

But S&P’s analysis may have been impacted by the $2 trillion “error” that the US government quickly pointed out. Therefore, how serious the impact of S&P’s action will be is also a function of whether Moody’s and Fitch (the other two major rating agencies) will also downgrade America’s credit rating.

Introducing the new me!

When I turned independent consultant and trainer two months ago, I was sure I’d have lots of time to blog everyday. Maybe write even 2 or 3 blogs a day. But I realize that it’s been more than two months since I wrote my last blog. I am appalled at my own sloth. They say if you make a resolve publicly, there’s a greater chance that you will stick to your intent. So let me announce my intent to blog at least 3-4 times a week. So help me God!

And if any of you is curious about what kind of “consulting” I do, well, it’s primarily in the area of marketing and brand-building. I also deliver training around topics such as:

building trust with clients
working in virtual, multicultural, globally-distributed teams
corporate etiquette
communication (and yes, that includes listening!)
developing a consultant’s mindset

While some of my sessions are targeted at the IT and ITES industries, most of the content is relevant to any business. If you’re looking for help in these or allied areas, leave me a comment with contact details. I’ll get back to you.

Kaboom, followed by gloom and doom in Karnataka?

Following the resignation of Mr B S Yeddyurappa, who remains indicted in the Lokayukta report on illegal mining, Karnataka has a new Chief Minister in Mr Sadananda Gowda. This action by the BJP leadership has given the party the opportunity to take a moral high ground in its continued diatribes against the UPA government at the centre. But will the change really make any difference to the aam aadmi in the state?

One must not forget that in politics, the king-maker is more powerful than the king himself. There is already much scepticism that the new CM will only be a puppet in the hands of Mr Yeddyurappa. To be fair to Mr Sadananda Gowda, it is too early to agree with this pessimistic view. But there are already signs that factionalism continues to rive what once claimed to be India’s most disciplined, cadre-based party. Mr Jagadish Shettar and his supporters did not attend the swearing-in ceremony. The state BJP President had no choice but to attend, although he too had cast his lot with Mr Shettar.

Unless the BJP is able to bury these internal differences and there is collective support for the new CM and his council of ministers in taking urgent and visible steps to put Karnataka back on the path to development, it is very likely that the Congress and JD will be able to make political capital of the mis-governance in the months ahead. That could well pave the way for BJP losing its first government south of the Vindhyas- just as the Congress and its allies are unlikely to be voted back to power in the centre, unless Dr Manmohan Singh and his ministers can work a miracle in the next year or so. Assuming, of course, that the government lasts its full term.