MARKET PERSPECTIVE

By J Mulraj

Feb 15-21, 2025

Shaping the Narrative is an Art

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In one of their hilarious skits, Costello asks Abbott ‘what makes a balloon go up?’ and when Abbott replies ‘hot air’, Costello asks ‘then what’s keeping you down?’

One can ask all global leaders the same question! They are full of hypocrisy! Francois de la Rochefoucauld, a French Duke and author, was correct in pointing out that ‘few people have the wisdom to prefer the criticism that would do them good, to the praise that deceives them’. Take a few examples:

The hypocrisy of European leaders: After an unnecessary war which has lasted three years, with Russia and Ukraine losing hundreds of thousands of their young men (Ukraine’s fertility rate has fallen dangerously low as a result), President Trump is seeking to get a negotiated settlement to end the war. He is meeting Russian President Putin, in Saudi Arabia, to understand what Russia, which has the capacity to win the war, wants. European leaders are fuming at being left out of the negotiations, as is Ukraine.

This smacks of hypocrisy, for several reasons. For starters, as John Mearsheimer, Professor at Chicago University and an international relations scholar, has pointed out, Putin had publicly asked, no less than four times, for Europe and the US, to sit down and talk to him to hear his concerns about a NATO membership for Ukraine.

He considered NATO membership for his neighbor an existential threat to Russia as it allows  other members to place weapons at Ukraine’s border. This leaves insufficient time for Moscow to respond and intercept.

Anyone who has a rudimentary knowledge of history knows that this was how the Cuban missile crisis began. America, a NATO member, had placed its missiles in Turkey, posing a threat to Russia. President Kennedy ignored the pleas of Russian President Khrushchev not to place them. His pleadings ignored, Khrushchev quietly put  Russian missiles in Cuba, at America’s doorstep. Kennedy quickly negotiated a mutual withdrawal of missiles.

Europe, having ignored Russian pleas for talks to prevent the war, is now asking to participate in talks to end it! Is that not hypocrisy?

Remember the two world wars have both been fought in Europe, after diplomacy failed. As Franklin Roosevelt said ‘war is young men dying and old men talking’

Another reason is the agreement reached between Ronald Raegan and Gorbachev  to end the Cold War, unify East and West Germany, and break up   the Soviet Union. As part of the deal, it was agreed that NATO wouldn’t expand eastwards, towards Russia. But it did! Russia was, then, too weak to protest. So the demand of EU nations to allow their agreement to grant NATO membership to Ukraine to subsist is hypocrisy when they themselves had broken the earlier agreement to not expand eastwards.

Ultimately a negotiated settlement will be made, and all sides will be at the table. A negotiated settlement will allow Ukraine to salvage its country, preventing annihilation. However, having lost the war, it will have to give up some territory. The US will provide the security guarantee (EU can’t guarantee it; they have no stomach to see their youth dying in battle; hence they have outsourced death to Ukrainian youth). Trump will probably secure some Ukrainian assets like fertile land, mineral resources and fertilizer.

The hypocrisy of American leaders: 

One of the things America voted Trump in for was his promise to cut wasteful expenditure and reduce the fiscal deficit, which had hit an unsustainable $1.9 trillion. Trump appointed Elon Musk to head a newly created Department of Government Efficiency, or DOGE. Elon’s team revealed shocking examples of wasteful expenses, starting with USAID, which it has temporarily shut. US Democratic Congressmen, perhaps fearful of what might be revealed, are objecting to this, on the ground that Elon Musk, as an unelected person, ought not to be given access to confidential information. Which smacks of hypocrisy, since the objectors, being ‘elected officials’ have done nothing to stanch waste! A shocking finding is that US gold reserves, stored in Fort Knox, haven’t been audited! Trump has ordered an audit to see how much gold actually exists!  The Pentagon has failed its 7th audit! Is there no accountability? And when an elected leader seeks it, why do some elected representatives oppose it, and some courts stay it? Does the Emperor wear clothes?

Similarly, at the confirmation hearings of Trump appointee as FBI Director, Kash Patel, Democrat Senators expressed concern that, if appointed, he would go on a witch hunt to remove those who had abused their positions; he should, instead, make the institution independent. Hypocrisy, indeed. After having scuttled its independence (remember the 13 FBI agents who signed a declaration that the Hunter Biden laptop story was Russian disinformation, which was later proven to be a lie, to help Biden win the election?) they now want Kash Patel to hold back on making them accountable.

The hypocrisy of electoral promises in India:

The BJP promised less Government and more governance and an end to corruption. Yet the Government continues to micro manage in a foolish, myopic way! The aim of the Finance Ministry is to squeeze the last drop of juice out of the tax lemon. The levy of a higher GST tax rate on caramelized popcorn compared to salted popcorn, on the laughable ground that adding sugar instead of salt makes popcorn a ‘sweet’ is so myopic that it diminishes the prestige of the Government and of the FM who stated the case in a televised session of Parliament. Can such pettiness of thought not be ditched?

And has not the Government learnt anything from past experience? Whenever tax rates are lowered, and are fair, tax collection RISES!

And why is there an insatiable appetite for revenue? Partly because of freebies, distributed by the States but ultimately paid for by the Centre.

The Supreme Court recently commented on the culture of promising freebies to win elections. Earlier, of the three types of fertilizer, nitrogenous (urea), phosphatic and potassic, it was urea that was most subsidized. As a result, farmers overused it, damaging their soil. So the intention of providing a subsidy in order to help the beleaguered farmer, actually ended up hurting him!

Here’s a suggestion. If any political party wishes to offer a subsidy or freebie, it must get approval from the Election Commission, which must ask the party to estimate its cost over the term of the legislature. The EC must then get, say, 33% of the cost from the party, upfront! The ardor for offering freebies will diminish when money flows from party coffers and not from tax revenue. Try it!

Last week the BSE Sensex closed at 75311 , down 628 points over the week.

India has invited bids for oil drilling in the Andaman and Nicobar Islands, with, perhaps, a discovery of enough crude oil to meet India’s crude oil needs for 70 years!

That would be a huge boost for India, strengthen its currency and be fodder for stock market bulls. Indias trade deficit in January was high, at $23 b.

What investors should look forward to next is a negotiated ceasefire between Russia and Ukraine, perhaps leading to a weaning away of Russia from China, and a  confirmation of a large oil reserve in the Andamans. And, yes, less of hypocrisy and more of meritocracy!

comments may be sent to  jmulraj@asiaconverge.com