| But first, the Left. Their credentials are too clear to leave any kind of doubt as to whose interests they represent. They listened to their Russian masters, who along with England were fighting Hitler, and opposed our Quit India movement in 1942. |
| In 1948, their B T Randive t proclaimed "Yeh Azadi Jhoothi Hai" and in 1962, under the leadership of Namboodripad, they said India was the aggressing nation. And now they are opposing the nuclear treaty on behalf of you-know-who. |
| The Left has always been a reluctant bride in this marriage of convenience. They never allowed the Government to move ahead on the road of reforms. FDI in insurance remains at 25 per cent of the capital and the Disinvestment Programme remains in deep freeze. |
| Reforms were not happening anyway. So how does it matter if the Government falls? |
| Well, it does. Apart from its strong fundamentals and population dynamics, the Indian story has had four other strong pillars as well. These were an appreciating rupee; a favourable tax regime; a stable, reform-oriented Government; and peace with Pakistan. |
| Suddenly, the last two pillars are shaking. The Government's stay in office is now at the pleasure of the Left as well, apart from that of the President. The Government is just out on parole and it risks falling should it take any step forward in the nuclear deal with the US. |
| The situation in Pakistan too is not very comfortable for Mian Musharraf. If things go wrong there, India could see a deluge of refugees on our western land borders, especially in Rajasthan and Gujarat. The spectre of nuclear weapons falling into the wrong hands is too horrifying to even contemplate. |
| Going back to the US, we find that sentiments have improved after the Fed cut discount rate last week. One of the reasons for this newfound confidence is the assumption that the Fed will cut the Fed Funds rate as well, either on September 18 or earlier. |
| The sub-prime mess won't clear easily and a cut in interest rates will create a new problem for the Fed "" that of inflation. Prior to the chaos in the global markets, the Fed clearly stated how inflation was its biggest worry. |
| In fact, a day before the discount rate reduction, St Louis Federal Reserve President declared that the central bank wouldn't need to intervene in the stock market short of a calamity. |
| Already-battered US auto sales could be the next victim of the problems with mortgages, declining home and stock prices as potential car buyers delay purchases due to uncertainty. |
| If someone defaults on a housing loan, take it for granted that the man or woman in question would have already defaulted in credit card payments and auto loans, the two most common loans house owners may have. |
| With banks beginning to tap the newly opened Fed window, it is being seen as a turning point in the four-week-old credit crisis. This will also, unfortunately, reduce the chances of a rate cut that the markets have been expecting. |
| And assuming that the Fed in fact cuts the rates, it does not necessarily result in the markets going up on a sustainable basis. |
| There are three times in recent history that the Fed has cut rates at an unscheduled meeting. One is in the aftermath of the September 9 attacks and two before on January 3, 2001 and April 18, 2001. |
| One can ignore the September hike as it followed a calamity, but the other two instances were pure economics-driven decisions. While the markets rose initially in both he cases, they tumbled 14.5 per cent and 21 per cent from their post-cut highs. |
| The only time our markets have factored in the risk to the Government was on Thursday, when it fell just 85 points. So our problems do not end if the Left suddenly starts behaving. We need to see the world markets in general to do well, to enable us to come out of the morass that we find ourselves in. |
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