Viswanathan K's Thoughts

In 1935, Mussolini invaded Ethiopia. In response, the League of Nations (equivalent to the UN) imposed sanctions on Italy. Germany and Japan watched this closely: If sanctions were imposed on them, how would they fare? That is the theme of an interview with the author and European historian, Nick Mulder.   Let’s start with Germany. As they started to increasingly focus on militarization and industrialization in the 1930’s, they needed energy. Coal and oil. This need for coal was the reason they invaded the Ruhr eventually (apart from the point that it was theirs to begin with and wrongly taken by France after World War I). On oil, they got lucky with the timing. Thanks to the Great Depression, trade and thus prices fell, making it cheaper for Germany to import oil. The Germans realized that sanctions were unlikely to be imposed on them at a time of global depression – Germany not being allowed to buy oil would mean some exporter like the US would also suffer!   But i...

Is Germany, as Tyler Cowen argues , the “Silicon Valley of political innovation”? Here’s why he feels so: 1)       Post-war de-Nazification : As Cowen says, “it is difficult in world history to find a comparable switch in attitudes” anywhere in the world. 2)      German unification : The unification went through with barely a glitch, despite the vast economic differences between the two sides. And in record time. Most places split up, and “Large-scale political mergers seem to belong to the era of the 17th to early 20th centuries, but Germany pulled this one off”. It’s hard to argue with the above, but where Cowen goes wrong in my opinion is when he cites the EU (which was formed due to a large push by Germany) as yet another successful example of German innovation. What makes his view even more surprising is that he wrote this in May, 2017. After all, isn’t this the how most of us think of the EU today? -     ...

Thomas Piketty became a very famous economist with his book, Capital . You can imagine how popular that book was by the fact he even gave a TED talk on it. Recently he gave an interview on the German led demand that the Greeks must pay their debts. What’s wrong about that, I wondered. Piketty’s answer: “Germany is really the single best example of a country that, throughout its history, has never repaid its external debt. Neither after the First nor the Second World War. However, it has frequently made other nations pay up, such as after the Franco-Prussian War of 1870, when it demanded massive reparations from France and indeed received them…The history of public debt is full of irony. It rarely follows our ideas of order and justice.” Wait a minute: aren’t we taught that the punitive Treaty of Versailles on Germany was one of the root causes of the Second World War? Piketty points out that the Germans just stopped paying after a point! And after the Second World War ended,...

The headlines about Germans being poorer than the Italians and the Spanish and other Europeans make for amusing reading. Those headlines were based on ECB (European Central Bank) data, no less. Which rules out the data source as being wrong. But, let’s face it, the headline is so obviously and completely wrong. Who in their right mind thinks of Germany as being the poor cousin of Europe? So what exactly is wrong here? The one word answer: statistics. As in that famous line about statistics and damned lies. As in it’s as much about what is revealed as what is hidden. Now for the longer answer. Turns out most people in Spain and Italy own homes whereas most Germans don’t. So when you calculate the net wealth of an individual, you add the home value in Spain and Italy but not in Germany. Oh by the way, the ECB data was based on 2008 home values, and, unless you lived in a cave, you’d know the values of those homes today would be much less. Much, much less. Additiona...

I remember this part in a Frederick Forsyth novel ( The Fourth Protocol ) where the Brits had a lady whose job was to look at photos of people and being able to map them to names in government databases (her job was to spot spies from the Soviet bloc). What struck me was that face recognition back then could only be done by humans. Fast forward to today and software does it very well too. I had heard of Face.com that created this app you could install on your smartphone. The app could link to your Facebook account, scan photos of all your friends on Facebook and then start automatically identifying and tagging them in photos you took subsequently. Of course, this was an app you had to install on your phone, so not everyone used it. And then Facebook bought Face.com, and decided to make Face.com scan all images on its databases and start tagging people automatically in any photo loaded onto Facebook. This meant that the facial recognition app had moved from acting only on photos tak...

Mohit Satyanand asked this interesting question in Outlook Money as to why the same government that considers it necessary (and even desirable) to subsidize diesel and LPG in the name of protecting the poor wants to, on the other hand, charge the “correct” (read higher) price for telecom spectrum. After all, he argued, the cellphone revolution has benefited the poor just as much as everyone else, so any increase in spectrum price will impact the poor too (the telecom companies would pass on the increased cost of spectrum to the consumers by hiking telecom tariffs). I guess the answer is that the 2G scandal has forced the government to switch to market economics in case of telecom. The day we have an equivalent scandal in the fuel segment, maybe we’ll see fuel prices being determined by market forces too. Then again, as Greece now threatens, countries often prefer populism over paying the bills, prefer to default on their loans than to pay their creditors. You could explain what the...

I didn’t realize how much dislike and fear that most of Europe still has when it comes to German influence until I read this article by Michael Lewis . The article itself is very long, gets quite vulgar at times and is still very informative. While the rest of the Western world (Iceland, Greece, Ireland, the US) behaved like lunatics when loans were easily available at low interest rates, the Germans showed restraint. Commendable? Not entirely. Because the Germans lent their “own money to enable foreigners to behave insanely”. I guess that’s why they say “Neither a lender nor a borrower be”. (Of course, like any advice, overdoing that one isn’t a good thing either because it brings all economic activity to a halt). Today, to avert financial Armageddon in Europe, everyone wants the Germans to bail out the Greeks (and presumably, the Irish, the Italians and the Spanish after that). The Germans, obviously, are not enthusiastic about doing any such thing. But even if they do agree, t...

Saw this funny video on YouTube about the ongoing bailouts in Europe in the form of a quiz. Questions included naming the countries being bailed out. The amounts involved. The countries doing the bailing out. The best question went something like this: Where were countries like Germany going to get the money to do a bailout if they were in not that a great shape themselves? Nobody seems to have an answer to that one. The other "bailers" like the US and Britain can print dollars and pounds. Germany, on the other hand, can not print its currency because the Euro can not be printed unilaterally by any member nation. So where exactly will Germany get the money from? Two options I can think of: the first is that the EU agrees to print more Euros. Seems unlikely given that it would drive inflation up all over the Euro zone. The second option is for Germany's debtors (like Greece) to eventually start paying them back. I wouldn't hold my breath on that happening. The video di...