India must offer to bail out Europe

Discussion in 'Economy & Infrastructure' started by Singh, Nov 8, 2011.

  1. Singh

    Singh Phat Cat Administrator

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    China has scored the first point in the great game involving post-crisis Europe. China is likely to contribute to the euro zone’s bail out fund, the European Finance Stability Facility (EFSF). The magnitude and design of China’s contribution will depend on details of the Angela Merkel -- Nicolas Sarkozy 50% plan (so called because it “haircuts” Greece’s debt by that amount) that was the result of the euro zone summit held last week.

    French President Sarkozy pushed the plan with Chinese President Hu Jintao hours before the summit ended to get China to commit. In the days since that phone call, Sarkozy has come in for much criticism in France. Six months before France holds a presidential election, the opposition is going to town on Sarkozy’s admission of ”weak euro hands”, with some going to the extent of calling it “dirty money”. But with domestic politics not allowing Sarkozy and German Chancellor Merkel to pony up the full amount of €1.3 trillion, Europe is left with little choice but to expand the geographical footprint of its begging bowl.



    US President Barack Obama waves as he arrives for the G-20 summit in Cannes, France on Thursday. AP

    Enter China, which has shrewdly capitalized on this desperation. By engaging in a discussion but, at the same time, by watching and waiting and hemming and hawing on the details, China has gained the strategic upper hand with the leaders of the euro zone. By playing coy as the reluctant banker, China is ensuring that domestic and international criticism of its role remains muted. No matter what happens, and how much China ends up eventually contributing, it will have blunted future European ability to conduct strategic dialogue from a higher perch. On currency and on human rights and other issues that will arise over time, Europe’s ability to influence China is likely to be damaged for quite some time to come.
    In contrast, India has followed its usual, timid, multilateral negotiation style. One doubts if French foreign minister Alain Juppe even has a hot line to the mostly somnolent Indian foreign minister. The planning commission, as is its wont, has murmured something about supporting the EFSF through the International Monetary Fund (IMF) even though the United States, which is the largest shareholder of the IMF, has kept no one guessing about its displeasure about IMF participation in a euro zone bailout. The declaration, made after the India-Brazil-South Africa (IBSA) meeting held in Pretoria in October, was long on rhetoric and short on action. Even Brazilian foreign minister Guido Mantega has taken the ball on the front foot by saying “we will see what we can do [to help Europe]”. When it comes to engaging the world, more often than not, India chooses to hide within the petticoat folds of some multilateral organization.

    It is time for India to enter the fray as an individual participant. India will be presented an excellent opportunity in Cannes this week when the G-20 meets. If India believes that it belongs in the United Nations Security Council’s permanent group, now is the time to step up to the plate. Needless to say, the details of the euro zone plan are important as is some assurance that our funds will be “guaranteed”. India should begin the discussion with a willingness to commit between $10-25 billion. A portion of this can come directly from India’s foreign exchange reserves of over $300 billion and the remainder as rupee funds to limit the impact of foreign exchange fluctuations.

    For India, the best play in this round of the game will be to offer and negotiate but finally not be called upon to participate. This will enhance our credibility and our strategic position but protect our funds. There is every chance that this could happen because many Europeans are deeply opposed to the idea of emerging markets funding their bailout. Many Europeans, it appears, would rather suffer the consequences than seek funds from countries that they were bailing out not too long ago. Of course there is also a chance that once you stand up to be counted, the funds will be called and we will have to be prepared for that.

    India’s gentle gazing from the sidelines makes it a non-participant in this great game. As the Americans say, “you have to be in it to win it”. It is time.


    Views | India must offer to bail out Europe - Views - livemint.com
     
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  3. KS

    KS Bye bye DFI Veteran Member

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    Seriously someone said that ? OMFG.

    China with 10% poverty, 11% groth rate, 5 trillion economy and more than 2 trillions in Forex reserves can afford that..India as of now definitely cant.
     
  4. Bangalorean

    Bangalorean Stars and Ambassadors Stars and Ambassadors

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    Silly headline, and silly recommendation. India can be part of a "financial coalition" that bails out Europe, but to say that "India should offer to bail out Europe" is just silly. Reflects a lack of knowledge of ground realities w.r.t. India's financial position.
     
  5. W.G.Ewald

    W.G.Ewald Defence Professionals/ DFI member of 2 Defence Professionals

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    Everything will be fine. Just take your turn bailing and being bailed. :)
     
  6. Yusuf

    Yusuf GUARDIAN Administrator

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    Actually what benefit will India get in bailing out Europe? None as far as I can see. No strategic gains by bailing out the PIGS. Europeans will just say thank you very much and the next thing you know is they are giving you lectures in human rights, nuclear non proliferation etc. Wonder why China is jumping in.
     
  7. pmaitra

    pmaitra Moderator Moderator

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    I would rather pick one European country and start bailing them out. My pick would be Germany. They have been sidelined and kept under tabs by the US, UK and France for too long, they have some of the finest civilian technological advances, they seem to like to maintain cordial relations with Russia and being at the centre of Europe are a bridge between East and West. Needless to day, German is the most widely spoken lingua nativa or lingua materna in Europe after Russian (English is rather the lingua franca).

    The problem is that Euro is common to so many troublesome countries. I'd rather buy out real estate and invest in companies in Germany and make our presence felt.
     
  8. Iamanidiot

    Iamanidiot Elite Member Elite Member

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    Let the damn thing collapse I had enough of EU and its snobbery
     
  9. Yusuf

    Yusuf GUARDIAN Administrator

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    Germans are the biggest racist even today. I really doubt they would take a bail out from "India". Germany is in no need for a bail out anyways. Its doing pretty alrite right now. I really cant see India offering anyone who will actually be grateful to India later on.
     
  10. KS

    KS Bye bye DFI Veteran Member

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    or someone who 'grateful ness' matters something in strategic terms.
     
    W.G.Ewald likes this.
  11. pmaitra

    pmaitra Moderator Moderator

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    Perhaps that is your experience.

    I found them to be rather helpful.
     
  12. Bangalorean

    Bangalorean Stars and Ambassadors Stars and Ambassadors

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    Yusuf, why do you say so? I have gone to Germany several times, and I never encountered any racism. The only issue there is language problem - if you don't know German, you will find the going tough if you move around and interact with the public.

    But then, I was always in my cocoon - airport to hotel to office and back. Never really interacted with the masses. But still, I didn't even hear any Indian residents complain of any racism.

    You are right though, that Germany does not need bailout. Germany is doing very well - the best in Eurozone. Hell, the Germans have a trade surplus even with China!! Beat that!!
     
  13. Yusuf

    Yusuf GUARDIAN Administrator

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    Being helpful does not make them NOT racists. Angela Merkel made an open statement about the same too. I really dont see India getting anything from them in return for Indian money. Even our defense purchases are now looking at manufacturing in India which will mean jobs in India and not abroad.

    MWhy should the rest of the world bail them out anyways for their bad policies? It means you can be wayward in your ways and know that if you are going down, there will be others to bail you out. BS. Let them go down and let the new world order come around. Rather quicker than expected.

    India should make sure that this currency fluctuation does not hurt us. Though it may be against free market policy, while America and Europe struggle, India should peg its currency to insulate bother exporters and importers from the wild fluctuations and also work its way to avoid trading in dollar and euro.
     
  14. Yusuf

    Yusuf GUARDIAN Administrator

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  15. Bangalorean

    Bangalorean Stars and Ambassadors Stars and Ambassadors

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    Yusuf:

    Well, such statements about the failure of multiculturalism, have been made by almost every European leader in the recent past. In some cases, I can even agree or sympathize with what they are saying. There is lot to talk about here - maybe some other thread.

    But see - its all very well to talk of "new world order" and all that. The reality of today is that the world needs Europe to stay afloat. The world economy is interconnected, and there is far too much interdependence. Europe needs to be bailed out today, for the greater good of the world.

    The new world order will come up in its own time. Everything will happen in good time, gradually. Do not hope to artificially accelerate the process and expect something overnight. The pain will not be worth it.
     
  16. Yusuf

    Yusuf GUARDIAN Administrator

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    Bring it in. Marshall Plan in a new avatar by China. Europe keeps making wars, keep making all kinds of economic blunders and keep getting bail outs.
     
  17. Yusuf

    Yusuf GUARDIAN Administrator

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    I really would not mind bailing out some other nations who would be worth it. Europe will take the money and then be back to its old ways. They will not hold back when they have to vote against you when their "morals" are being disturbed. The Europeans have technology. Let them sell it. India can then open up to buy it. no free lunches.
     
  18. thakur_ritesh

    thakur_ritesh Administrator Administrator

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    As a matter of fact, I would love to see the BRICS to get together and do the bail out through the IMF (a multilateral platform), unlike what mr ramachandran has to recommend. This is one of the few common causes between India and PRC where the two need to and can work closely together.

    Bailout out through IMF, and bargain a big share in the voting share of the IMF for the 5 countries, and significantly marginalize the EU there, your job is done.

    If not that, then yes, look for individual country negotiating for itself, but what is it that the EU really has to offer has me perplexed. Are they in a position where India can bargain something significant on trade? If yes, go ahead and get a head start over others, we as such are looking to make a huge boost on the manufacturing front and we need markets which immediately open up to all that export.

    Then there is the MMRCA going to Europe, another big influencing factor, couple the 2 and strike it big.

    India is in a position to bailout the EU, the forex reserves as of 4[SUP]th[/SUP] Nov stood at 321b usd, so handing out 20-30b usd shouldn't be much of a problem but yes as the FM says we need to have a plan presented by the EU where we see the returns, and not the money sinking.


    Is India Ready to Rescue the Beleaguered Euro Nations?

    Is India Ready to Rescue the Beleaguered Euro Nations? - International Business Times
     
  19. W.G.Ewald

    W.G.Ewald Defence Professionals/ DFI member of 2 Defence Professionals

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    The whole world will be robbing Peter to pay Paul.
     
  20. The Messiah

    The Messiah Bow Before Me! Elite Member

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    Screw em. 8)
     
  21. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    Probably because ESFS bonds are rated AAA with the highest return for any bond of that rating. It is a far better return than sitting on the worthless dollar.
     

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