[Guest Post] Views on Terrorism by Padmaja

Trying to understand Terrorism, Padmaja tries to explore whether one can really go so far for the sake of just a belief and raises few questions on the world leadership. Read it.

One more terrorist attack & we are all forced to either think for the cause or the solution.The Attack on Delhi high court has set in the state of panic in the air once again.

In India we have the naxalites, the communist group which believes they are causing a revolution but we call them terrorists. Then there are the Tamil Tigers in Srilanka and the IRA group all of whom believe they are freedom fighters. And there are the religious terrorists who believe they are fighting for their religion.

I feel any man who is willing to die for what he believes in is a wonderful man. The problem is that there is a huge volume of anger and hatred behind it and so the end result is ugly. Otherwise a man who is willing to die for what he believes in has a wonderful quality. Isn’t it so? How many of us are really courageous to die for what we believe?

It’s just that this is happening with enormous anger and hatred against some body and that is the problem.

What are ADR and GDR?

American Depositary Receipt (ADR)

ADR is method of trading non-U.S. stocks on U.S. exchanges

Suppose, Indian Co. wants to raise money from America, by issuing shares in American stock exchange.

But then Indian co. will have to maintain accounts according to American standards.

To prevent this problem, Indian company gives its shares to American bank.

American bank gives that Indian company receipts (called ADR) in return of those shares. Then Indian Co. can trade those ADR receipts in American share market, to raise money.

Global Depository Receipts (GDR)

Serve as same function like ADR, but on Global scale, it helps the countries from third world, to raise money from the stock exchanges in developed countries.

Several international banks issue GDRs, such as JPMorgan, Citigroup, Deutsche Bank, Bank of New York.

Normally 1 GDR = 10 Shares, but not always.

##As described by Mrunal

How to calculate GDP (PPP) and GDP nominal?

Image via Wikipedia

Take a basket of commodities (like 1 kg sugar,wheat,veggies and cloths etc).

Now find out how much money do you need to buy everything from that basket?

For India suppose the bill is 1700 Rs.

Go to America and buy same items from their local market, the bill is 100$

So 100$=1700 Rs. => 1$=17 Rs.

So, PPP exchange rate is 17 Rs. per 1 $

To calculate GDP (PPP)

GDP (in Rupees) / PPP exchange rate for Rupees

=100/17

=5 $

India’s GDP (PPP)= 5$

To calculate nominal GDP in $. 

Just convert the Rupee into dollar at official exchange rate.1$=50 Rs.

India’s GDP (in Rupees)/official exchange rate

=100/50

=2$

So India’s GDP (nominal) is 2$.

#As described by Mrunal

Why use GDP (nominal) instead of GDP (PPP) when comparing two nations?

For example:

In India majority of people are poor, and receive subsidized grains (like 1 kilo rice for 3 Rs, kerosene etc. from PDS shops.

In America poor people are supported by Government by food stamps and social security cheques.

Now comparing two nations, GDP (PPP) wise,

Obviously majority of Indians are poor, and majority of them get cheap- subsidized stuff, the purchasing power parity of India may look better than Americans.

But does it really mean India is financially more powerful than America just because Indians can buy more stuff in local market compared to Americans?

No, because financial activity is not limited to local market.

We’ve to import crude oil from Middle east and buy jet-planes, missiles from Russia,France and Israel.

We’ve buy pulses and onions from Africa and Pakistan(!), Those people are not going to sell us stuff with subsidy in Rupees, like we get in our local market.

They’ll ask hard dollars (or gold or diamonds) as payment. So there, in international market, America can purchase more crude oil, fighter-jets, missiles and onions compared to India, even though its GDP-PPP wise it may not be powerful as India.

Even China can buy more stuff internationally than we can, because our forex reserve is only 270 billion, while Chinese got 1400 billion $!

GDP at PPP gives us only picture of how much stuff we can buy within our country.

GDP at nominal rate ($) gives us bigger-picture of how much stuff  we can buy internationally.

Using GDP (nominal), it becomes easier to compare two nations’ financial strength, by comparing their ability to purchase in international market in same currency (dollars). The one who has more $$, can purchase more stuff internationally.

So bigger the GDP (Nominal), powerful a country is financially. While in case of GDP(PPP) we cannot say with confidence that bigger the GDP (PPP) is, powerful a country  is financially, because they may be heavily-subsidizing it.

#As described by Mrunal

Why G-20 is a failure or will be one?

Prof. Nouriel Roubini, the famed economist who is credited with predicting the global financial crisis comments on the utter failure of the G-20 in giving global leadership.  Recently he cited reasons for this failure. I am just putting them down here and awaiting comments, if any. This is available on internet elsewhere as well.

India likely to be world’s largest economy by 2050: Citi

In view of its continuing robust growth, India is expected to be the world’s largest economy by 2050, surpassing China and the US, a Citi report said.  The estimates are based on purchasing power parity (PPP), an economic growth indicator that takes into account the purchasing power of each country’s currency, instead of the prevailing exchange rate conversion (GDP nominal).