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Economy

The Food Security Bill Spooks Markets, Banks Fall 5%, Nifty Down 4%

The Food Security Bill has been passed and markets don’t like it. Banks are down 5%. Everything has crashed across the table, except for IT.

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The dollar meanwhile had briefly crossed 66, but is at 65.65 right now.

The 10 year bond has gone down, with the yield going to 8.57%.

We aren’t heartless bastards in the markets. The fear is not that people will be fed. The fear is that more food will be accumulated in godowns and made to rot, while more people die hungry and even more have to scrounge around for food. The fear is that the MASSIVE government purchases will leave very little for the rest of us to buy, that we have to pay a much higher cost (read: inflation). The fear is that the government will let so much money be siphoned off through this program, while paying for it through borrowing, whose costs will go through the roof and hurt everyone.

The fear is that the government will be inefficient, inconsiderate and ineffective, like it has always been. The fear is that because they spend so much on this, they won’t be able to spend on really useful things like roads, and water, and infrastructure. The fear is that they will try to extort more taxes out of individuals and corporates.

The writing is on the wall. Our children will pay for their sins. And they don’t care about our children.

It’s not just the Congress. The BJP agreed to it as well. The food security will not give us food, or security, but only give some people bills.

You know when a plane is about to crash, they tell you to sit and put your head between your knees? This is that time.

And while you’re at it, kiss your ass goodbye.

(You can tell I’m pissed off)

The only hope now, and this is a prayer more than a hope, is that the government machinery runs so inefficiently that they never get to implementing this program any time soon. But as we will notice, anything that involves spending is done fast. Anything that involves actual benefits will not happen. So they’ll procure fast, and probably never distribute. Thank goodness this year has had bountiful rainfall; even a normal monsoon will now be a drought.

  • Vj says:

    The fear is that after getting this bill passed, Congress might get re-elected next year. *facepalm*

  • Gold Bug says:

    In 1998 it was Indonesia, Thailand and Korea which brought in Asian Crisis. This time it will be India, Indonesia and Thailand and Philippines.
    Like Greece, Politicians are least bothered about Fiscal issues.
    We are finished. Buy Gold even now.

  • Gutu says:

    The more serious issue is if at a future date some government wants to windup this scheme, it will be branded anti poor and condemned no end. Heights of ineptitude.
    Market is only speculating about a taper in September. Imagine a total unwind of QE and monetary tightening too….. We are irretrievably lost

  • Guruprasad V says:

    Every rise and every fall need a story. If there are no stories then it would be boring. Trend has been completely down for the past couple of months. People are still talking about how great valuations are and planning for bottom fishing. So much fall, so steep is making players to buy for a short term bounce and so many things are there for this fall. Only reason is trend is down and fund flows are signing about the exit.

  • lohit says:

    Deepak,
    When even the ‘die-hardest’ fans of the market have given up, that is the best time to step in. We are not there yet, but probably will be in a few months if the much-feared ‘taper’ does happen.
    As someone once said (rather dramatically) – ‘Buy when there is blood on the street, even if it is your own’.

  • XYZ says:

    But you won’t be buying when there is blood on the street because you’d be the one bleeding.
    Everyone thinks they are smart enough to escape a crisis but only the rare few actually do escape.

    • lohit says:

      I have my SIPs into index funds/ETFs still running. As long as I have a job I will continue with them. Even if the Sensex goes to 8000 as it did in 2008. If it falls below 8K, probably time to increase the SIP amounts.

  • Ritesh Shah says:

    our government is criminal. lol yes … because if u r not blood sheded rapist criminal u could not get ticket to fight for election..
    i am waiting for the day when indian idiots like me revolt to hopelss bloodsucking government.
    even if bjp comes on sit, he will suck more blood, as it was hungry from last 10 years.

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