University of Chicago economist Raghuram Rajan makes the argument I was trying to make, only more articulately:

[T]he political response to rising inequality—whether carefully planned or the path of least resistance—was to expand lending to households, especially low-income households. The benefits—growing consumption and more jobs—were immediate, whereas paying the inevitable bill could be postponed into the future. Cynical as it might seem, easy credit has been used throughout history as a palliative by governments that are unable to address the deeper anxieties of the middle class directly.

Politicians, however, prefer to couch the objective in more uplifting and persuasive terms than that of crassly increasing consumption. In the US, the expansion of home ownership—a key element of the American dream—to low- and middle-income households was the defensible linchpin for the broader aims of expanding credit and consumption.

Exactly! Mr Rajan goes on to say:

In the end, though, the misguided attempt to push home ownership through credit has left the US with houses that no one can afford and households drowning in debt. Ironically, since 2004, the homeownership rate has been in decline.

The problem, as often is the case with government policies, was not intent. It rarely is. But when lots of easy money pushed by a deep-pocketed government comes into contact with the profit motive of a sophisticated, competitive, and amoral financial sector, matters get taken far beyond the government’s intent.

The road to hell is paved with good intentions.

It is difficult to understand how some politicians declare they are giving a fillip to the nascent wine industry by declaring it an agri-business but do nothing to ensure its longevity.

As ET reported earlier this year, more than half of Maharashtra’s 58 wineries have either closed down or stopped producing wine due to a glut in the market. Not only are 2 million litres of wine (a quarter of India’s total production) lying unsold, payments for grape crops are down to a trickle and falling prices make the outlook even grimmer.

It does really seem as if farmers were duped into thinking that wines are on the upswing and therefore devoted more acreage to wine grapes. And wineries readily accepted the subsidies offered by Maharashtra and raised capacity. And yet average wine consumption in India has remained a miniscule about 4-5 ml per person per year – that too, of all wines, not just local ones!

Of course I cannot see our cuisine, eating habits and culture allowing us to come anywhere near the US average of 25 litres per person but we can get to China’s average of 4 litres. And we can make a start by exploring what India has to offer.

Bismarck Lepe, co-founder of Ooyala and one of Silicon Valley’s more improbable success stories, addressed his audience in Spanish, explaining why his startup is opening an operation in Guadalajara, the city that might be considered the valley’s Mexican outpost, starting with eight employees.

For this delegation of 65 prosperous Mexican executives on a five-day pilgrimage to Silicon Valley, including visits to the likes of Apple, Google, Tesla Motors and Stanford University, the visit to Ooyala’s Mountain View headquarters on Wednesday struck a cultural chord.

Eighteen months — not a short time in the Internet business — have passed since I first wrote about Bismarck and Belsasar Lepe. They are the overachieving sons of migrant Mexican farmworkers who attended Stanford and worked at Google before partnering with fellow Stanford/Google alum Sean Knapp to launch their Internet video infrastructure startup in 2007. Silicon Valley may think of itself as a meritocratic melting pot, but tech entrepreneurs from the Latino laboring class are rare.

When I heard that the executives — on a trip organized by IPADE, Mexico’s leading business school — were visiting Ooyala, I figured it was a chance to catch up on the company and the Lepe brothers.

So far, so good: Ooyala has become a leader in its video platform niche, battling rival startup

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Brightcove. Guadalajara adds to a global profile that already includes offices in New York, Los Angeles and London, with others planned for Tokyo and Sydney. Its work force has roughly tripled over the past 18 months and is expected to reach 100 employees by the end of the year.

Ooyala now helps 600 customers operate 5,000 websites and do business in more than 100 countries

After the exceptional economic growth and prosperity witnessed by emerging markets, like China, India and Brazil, the CIVETS, Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa are expected to be the growth leaders in the next decade.  

As a whole, the CIVETS have appeal due to their large, young and growing populations, diversified economies, decent financial systems and political stability, when compared to their counterparties.  Additionally, the Economist states that all six nations are relatively unhampered by high inflation, trade imbalances or sovereign debt woes. 

On an individual basis, Colombia is rich in natural resources, in particularly oil, coal and gold, all commodities that are likely to see increased demand in the near future.  Additionally, international investment has already started to make its way to the Latin American nation and consumer spending has started to elevate.  

After Brazil and Mexico, Colombia is the 3rd largest recipient of Indian FDI

John Briscoe, professor of the practice of environmental health at Harvard School of Public Health, has spent 35 years in the World Bank studying water-related disputes around the world. He points out that large agricultural areas and most cities in the subcontinent depend heavily on groundwater, which is going down at an alarming rate. In India, the affected areas such as Punjab, Haryana, Delhi, Rajasthan, Gujarat, Maharashtra and Tamil Nadu are critical for food production.

Pakistan faces similar daunting problems. The Indus is likely to be much more seriously affected by climate change than any other river system in South Asia. Briscoe is convinced that unless there are major reforms in the way it is managed, water is likely to become a major constraint for economic growth and human wellbeing.

Indian policy makers acknowledge that the situation is grim. India is already below the water stress level, which requires availability of 1,700 cubic metres of water per person. Water resources secretary U.N. Panjiar says, “after best efforts to improve water use efficiency are undertaken, India is projected to have just 1,100 cubic metres per capita  by 2050,”

The relative strength that Latin America has shown as it recovers from the global financial crisis underscores the increased importance of trade with China and India, as well as strong fiscal policies implemented in the region, said a panel of experts Tuesday.

While the U.S. and Europe have struggled to recover, Latin America is booming, with Brazil expected to grow over 7%, Peru forecast to expand 6.6% and Chile anticipated to increase at least 5% for the year.

In recent years, as most of Latin America has expanded trade with India and China, it has taken advantage of two of the strongest economic engines on the globe and it has broken with the old paradigm of south to north dependence, said Alfonso Prat-Gay, former president of Argentina’s central bank.

That translates into reduced dependence on trade with the U.S. and Europe and moves toward breaking the traditional dependence of the “South” on the “North.”

“It’s become less relevant for Latin America that the developed nations are in crisis,” said Prat-Gay.

In Chile, which has the most diversified portfolio for its exports in the region, 23.2% of its exports go to China, 13.2% go to developing Asia, which includes India, 16.4% stay within Latin America, 18% go to the European Union, and 11.3% go to the U.S.

Meanwhile, the region, once characterized by bouts of hyperinflation and bulging public debts, is also seeing sustained growth on the back of strong fiscal policies, which have by and large reigned in those problems, Chilean Finance Minister Felipe Larrain said.

Some outsourcing jobs are becoming as cheap to fill in the US as they are in India, according to the head of the country’s largest business process outsourcing company.

More FT video

High unemployment levels have driven down wages for some low-skilled outsourcing services in some parts of the US, particularly among the Hispanic population.

At the same time, wages in India’s outsourcing sector have risen by 10 per cent this year and senior outsourcing managers based in the country command salaries above global averages.

Pramod Bhasin, the chief executive of Genpact, said his company expected to treble its workforce in the US over the next two years, from about 1,500 employees now.

EDITOR’S CHOICE

China proves tough for India’s outsourcers – Aug-17

Opinion: US needs to make bad jobs better – Jul-05

Video: Call centre closures hit Italy’s south – Aug-06

Firstsource lauds US reforms – May-05

Asia to reverse IT outsource trend – Feb-14

India’s IT outsourcers poised for pick-up – Feb-04

“We need to be very aware [of what’s available] as people [in the US] are open to working at home and working at lower salaries than they were used to,” said Mr Bhasin. “We can hire some seasoned executives with experience in the US for less money.”

The narrowing of the traditional cost advantage is also spurring other Indian outsourcers to hire more staff outside India.

Truth can be stranger than fiction.