Hungry times

Posted in development, disaster, economics, labour, macro by jrahman on June 27, 2020

For most people, macroeconomic indicators are gobbledegook — what does the difference between 5% and 8% GDP growth mean?  For most people, economic indicators that matter are the ones that animate dinner table conversations — jobs and incomes, and the cost of living.  In the advanced economies with higher quality data, it is jobs numbers that resonate most — one might not understand what GDP stands for, but it is very clear what a rise in the unemployment rate means if one’s neighbour has been laid off.

In developing economies with large informal sectors, however, quality employment numbers are hard to come by in real time.  Data on the prices of essentials — proverbial chaal, daal, tel, noon — are much more readily available, as are wage rates of different types of workers.  Mix those essentials and voila, there is a plate of khichuri.  Using the data on prices and wages, we can calculate the number of plates of khichuri an average worker could afford a day.


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Diagnosing a crisis

Posted in disaster, economics, institutions, macro by jrahman on May 5, 2020

As the COVID-19 pandemic fanned out of China, emerging and developing countries around the world were hit by a pandemic of capital flight.  Since January, about $100 billion left these countries ­ — an unprecedented sum, three times in magnitude than was the case in the equivalent period in late 2008.  Stock prices stumbled, while the yield on emerging market bonds rose sharply.  Investors fled the emerging markets seeking the safe haven of US dollar denominated assets, without discriminating between the countries they were fleeing.

In more recent weeks, a sense of calm seems to have returned to the markets.  Capital outflows have subsided, and bond yields have stabilised.  Bangladesh was spared the worst in March-April.  As markets start differentiating risks again, the question arises: how vulnerable is Bangladesh to a currency crisis?

A debilitating currency crisis is to an economy what a cardiac arrest is to the human body.  Just as there is a sudden stop of the flow of blood in the latter, in the former there is a sudden stop in capital flow into an economy (or sudden withdrawal of capital).  In both cases, the sudden stop could lead to disastrous consequences.  Neither is precisely predictable — if enough of the symptoms are visible, then a sudden stop is likely being experienced.  But in both cases, we can look at the underlying fundamentals and judge how much at risk the patient is.

The good news is that with luck, Bangladesh may well avoid the worst should there be another outbreak of capital flight.  For example, a recent analysis by the Economist judged that Bangladesh is not at risk of an imminent currency crisis.  The bad news is that we failed to tackle a range of issues during the good times, leaving us more vulnerable than might be recognised.  There isn’t any cause for panic, but there is much to worry about.


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Surviving the Great Lockdown

Posted in Uncategorized by jrahman on April 27, 2020

Economists aren’t known for their imagination, the lack of which among the practitioners of the dismal science is evidenced by the prevalence of the adjective ‘great’ to describe economic events.  Thus, the worldwide slump of the 1930s became the Great Depression, and the 2008-09 financial crisis led to the Great Recession.  Enter into this dubious pantheon of greats the Great Lockdown — the moniker given by the IMF to the shutdown of economic activities around the world in the wake of the COVID-19 pandemic.

The World Economic Outlook  — the IMF’s flagship publication  — is released twice a year, in April and October, at meetings in Washington DC that are attended by the finance ministers, central bank governors, and other econocrats from around the world.  There was no DC gathering this April, and the first chapter of the Outlook was released last week.  The Fund projects the world economy to shrink by 3% in 2020.  Not only is this a sharp downgrade from January projections, but if realised, this will be a worse performance than what happened in 2009 across the world (Chart 1).

If the real world was a textbook economic model, the Great Lockdown would have been followed by the Gala Reopening  — the consumers would have spent on the pent up demand, and the firms would be busy filling the shelves.  Unfortunately, the real world is not so simple.  The scary thing about the Fund’s forecasts is that they are based on assumptions that may well be too optimistic.


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Monsoon pandemic

Posted in Uncategorized by jrahman on April 13, 2020

The pandemic has reached Bangladesh.  There is no reliable number of the infected.  If other countries are any guide, things are likely to get worse, far worse.  Exactly how much worse, I have no idea.  I have no training in medicine or life sciences to opine on that, and even the expert knowledge is evolving by the hour!  But the human body is not the only thing affected by the virus.  The pandemic is affecting economies around the world, and that is something we know a little bit more about.  In this post, I will try to explain how the pandemic is likely to affect the economy and the policy challenges.


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Political economy in the time of Corona

Posted in Uncategorized by jrahman on March 29, 2020

I had just come out of local pharmacy with half a dozen or so travel sized hand sanitisers when the text came — trip cancelled, call TA to arrange refund, let’s discuss what can be delivered remotely.  I was few hours from a long journey across the world, and the sanitisers were standard travel precaution to the tropics, not something that was needed at home.

How life has changed in a month!  Now the sanitisers, and toilet papers, are scarce commodities that might be available in the dark web or lawless alleys of the night, except of course, even criminals might be maintaining social distance.  Now we work from home unless absolutely needed.  And I don’t even live in a country that is under official lock down.

I have refrained from writing about the pandemic.  This is a subject on which I knew very little about a month ago.  And as a matter of habit, I try not to write about things of which I know little.  Partly related to the lack of knowledge was the fact that I had no clear thoughts on the matter that I wanted to share.

So I spent the month reading, and listening, partly out of professional necessity, but also, as they say in Bangladesh — bachtey holey jante hobey.  I wouldn’t presume to know much, however.  Definitely not enough to tell what people should do, individually or collectively, at home here in my small town, or back there in the Desi megacity.  Rather, inspired by Shafiqur Rahman, over the fold is, as Lalmohan Babu might tell Feluda — No questions, shudhui jiggasha.


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Phir bhi dil hai Hindustani

Posted in Bollywood, movies, music, Rights, South Asia by jrahman on March 9, 2020

It was one of the first Bollywood movies to play in a mainstream theatre in our small town, and it seemed that the Desi communities — note the plurals — in its teeming multitudes had showed up, including the bunch I hung out with at the university.  This was over a decade before smart phones and ubiquitous social media.  We had the internet though, and MTV, so some of my friends knew the songs, and someone told me that I might like it, because it’s very political.

I don’t remember why, but I was a bit late and this had already started:

Trying to sit down in the dark, I heard one of the less-Hindi savvy guys ask — Ei ta ki Nazma Salma gaitese (What is this Nazma-Salma they are singing?).  Na bhaiya, Nazma-Salma na, naghma-kalma, you know, he is saying, she is my music and kalima — the girl-next-seat helpfully explained.  As for me, I kept wondering well into the intermission when the hot train dancer would reappear!

Dil Se is on Netflix and happened to be playing during a recent wine-filled late night adda.  I didn’t exactly watch it, hard to do so under the circumstances as you might understand, but it did make me think about how the movie has aged over the years, and yet perhaps is relevant than ever.  It all made me depressed.


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Ekattur-er boiguli

Posted in 1971, books, history by jrahman on January 30, 2020

About a decade ago, upon hearing about an upcoming trip to Dhaka, a friend invited me to a party — Great, that’s about the same time Meherjaan will be released, and you must come to the premiere.  

Meherjaan? — I asked, not knowing anything about the big screen love story starring Jaya Bachchan and Victor Banerjee set in 1971.  As it happened, family commitments meant I couldn’t attend the party.  People who did attend, however, were probably not prepared for the backlash from the Bangla blogosphere.  You see, Rubaiyat Hossain had the audacity to display the ultimate effrontery: a Bengali girl falling in love with a Pakistani soldier, didn’t she — both the eponymous character and the director — know that there was a war?


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Posted in economics, politics by jrahman on January 12, 2020

It seemed to me last week that every man, woman, child, and their pet dog had an opinion about the US-Iran stand off.  But I have never seen anyone predict this October surprise — The Donald striking a deal with the Supreme Leader.  If that happens, then you hard it here first.

Meanwhile, let’s have a crack at some soothsaying.

  • Will Boris Johnson agree a trade deal with the EU?  Yes
  • Will Britain’s Labour party return to electability?  Yes
  • Will Angela Merkel’s grand coalition collapse?  No
  • Will Matteo Salvini come back to power in Italy?  Yes
  • Will Donald Trump win the popular vote in November’s election?  No
  • Will the US go into recession?  No
  • Will China become world leader in 5G telecoms?  No
  • Will India regain its status as the world’s fastest growing large economy?  No
  • Will there be a war with Iran?  No
  • Will South African debt hit junk status? Yes
  • Will the protests that have shaken Latin America continue?  No
  • Will France’s Emmanuel Macron engineer a “reset” with Vladimir Putin’s Russia? No
  • Will we see meaningful regulation of Big Tech? No
  • Will Disney+ change the game in streaming?  No
  • Will Uber become profitable in 2020? No
  • Will vaping be banned? No
  • Will global carbon dioxide emissions fall? No
  • Will Brent crude prices end the year above $65 a barrel? Yes
  • Will the three-decade bond rally finally come to an end? No
  • Will Europe’s banks keep slashing jobs? Yes


Update: Shafquat Rabbee speculated along these lines in 2019.

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The two-handed people

Posted in economics, macro by jrahman on January 9, 2020

বাংলাদেশের অর্থনীতিবিদেরা …. বলতেছে, ক্রাইসিস আছে আবার সম্ভাবনাও আছে। তাই যেই দিকেই অর্থনীতি যাক, ঊনারা বলতে পারবেন ।  আমি কিন্ত, আগেই বলছিলাম।  (Bangladeshi economists …. are saying there is crisis, but there is also potential.  So, whichever way the economy goes, they can claim — I told you so.)

A brilliant autodidact he may be, but if the renowned Facebook pundit / activist  Zia Hassan had any idea about economics, he probably wouldn’t have made the above statement.

For one thing, economists are notorious for not reaching unanimity on major questions.  Take the financial markets for example.  Just a few years ago, Eugene Fama and Robert Shiller jointly won the Bank of Sweden Prize (aka Economic Nobel) — except the former claimed that financial markets are efficient and things like bubbles can’t really exist, whereas the latter has shown why and how bubbles form quite frequently.

More fundamentally, economics is fundamentally about trade offs, choices, and opportunity costs.  And anyone trained in that discipline instinctively thinks about ‘on the other hand’.  This is a feature, not bug, of economists’ thinking.  Not for nothing that former American president Harry S Truman hankered for a one-handed economist!

Turning to Bangladesh, there is absolutely nothing contradictory about seeing potentials and risks — the two are not mutually exclusive.  Bangladesh has achieved remarkable economic progress in the last 30-40 years.  One can quibble about the exact magnitude, precise causes, and to whom the credit should accrue.  But progress has been made and there are potentials for more — to deny this is nonsense.

And yet, the realisation of that potential is not guaranteed.  There are many challenges that need to be overcome.  Specifically, and immediately, there are problems with non-performing loans in the state-owned banks.  This is clearly recognised by anyone who has looked at the data.  But is it crisis?  I am not aware of any economic model or tool that would allow one to accurately forecast a financial crisis.  Even in the advanced economies such a feat is not possible — the data is simply too infrequent and imprecise.  Beware of anyone making such a forecast — they are more likely to be a Facebook pundit than an economist.

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The grand ending

Posted in action, books, movies, sci-fi, sci-fi, TV by jrahman on January 8, 2020

Oh that ending was epic, right?

The nine-year-old exclaimed as we came out of the theatre one Saturday afternoon last antipodean autumn.  We had just finished watching what would eventually become the highest grossing film in history.

Couple of weeks ago, after watching the ending of another multi-movie (and in this case, multi-generational) saga, I asked him — Was that ending epic?

Yeah, I guess so.

The less than emphatic affirmation made me think — what makes an epic’s ending, well, epic?  Of course, I couldn’t but help throw in the biggest television series in history into the mix.

The Avengers, Star Wars, and Game of Thrones — three epics of our times — ended (well sort of, fine prints, see towards the end of the post) in 2019.  How do I judge these endings?  And here, let me stress that  I am particularly interested in the way the story ends, not necessarily on how the story is told (or shown).  That is, I am not going to get into arguments such as whether the Star Wars prequels were worse than the sequels (I change my mind on this all the time) or whether the last season was Game of Thrones poorer than the rest (yes, absolutely).

Now, we need some benchmark to judge these epics against, and what is better than the grandest epic of them all?


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