What about investing in India?
“The Sensex seems much too high to us,” we replied. “Then again, there are a lot of companies that are little researched that are cheap…and growing fast.
“What I like about the Indian economy is that it seems to grow no matter what happens. Boom, bust, assassination, tsunami, riot – it doesn’t care.
“And it grows in spite of what the government does. There is some rule of nature, as yet unidentified: all governments do stupid things. But the more mature the government, the more stupid things it does.
“It is probably because mature governments have more money – at least in the rich countries. So, they subsidize everybody. The old. The young. The halt. The lame. The farmers. France even subsidizes the press.
“As the tide of subsidies washes in, the incentive to work hard ebbs away. People become used to getting by without doing very much. They get used to conniving with the feds, rather than engaging in difficult and uncertain businesses.
“You don’t have that problem in India. There is plenty of corruption, but it is limited to the powerful groups that control the legislature and the government. The middle and lower classes do not expect much in the way of handouts; there hasn’t been enough money available.
“So, the economy is still fairly light on its feet. Wages are low. People are getting rich fast. Government tries to stifle progress and make sure wealth gets funneled to cronies and apparatchiks, but the economy is largely out of control. The politicians pass new legislation every day. And the economy grows at night.
“And right now there are too many people earning too much money. They can’t be stopped. They won’t allow government to hold them back. Instead, the regional governments will begin to compete with each other to offer infrastructure and lifestyle improvements. Politicians will get out of the way, for fear they will be booted out of office if they prevent people from getting the wealth they feel is within their grasp.
“India looks good. Maybe not next year. Maybe not the year after. And maybe not the leading companies. But I would like to make an investment in India, go away for twenty years, and see what it was worth when I came back.
“Of course, twenty years from now…I’ll be happy to be able to come back at all.”
*** How ’bout that Obama! He’s put on the imperial purple:
“He stayed at your hotel, the Oberoi,” said a colleague.
“His team took up the whole hotel. It was unbelievable. They took up the hotel next door, too. There were helicopters overhead all the time. And US warships had been sent to block the harbor to make sure terrorists didn’t run up onto the beach in small boats, like they did the last time.
“We’ve never seen anything like it in India.
“One of the local papers computed the cost of the visit at something like $100 million. The report got picked up by the US press. Then the White House denied it and then said it wouldn’t give the real figure for national security reasons. Ha ha…
“A hundred million was probably about right…”
for The Daily Reckoning