Fault, Dear Brutus, Is In Our Stars

[Burger_King]

According to some historians, one reason we are communicating in English rather than in French is that the English government could rely on bond markets to fund budget deficit which arose due to war spending. In comparison, Napoleon was actually hostile to moneyed interest and thus could only rely on tax revenue for defense spending which was not enough to counter resources deployed by the English

Liz Truss' government was bought down in record time due to hostile reaction of bond markets on government's mini-budget. The UK bond selloff caused a spike in interest rates which in turn would have a highly adverse impact on UK's economy.

By a strange coincidence, we have seen similar development in Pakistan's external debt market that we have seen in UK recently.

Until early March, average yield on Pakistan's external debt was flat to that of Turkish debt. Turkey's credit rating is higher than that of Pakistan's rating so in theory, Pakistan's debt would have to yield higher to compensate investors for the risk of investing in Pakistan. Yet yield on Pak bond was around the same level to Turkish debt which was a sign of confidence on IK's economic policy.

Things were going relatively well for Pakistan until early March when there was a sudden spike in yields on government bonds. So what happened in early March? That was when news of no confidence motion came out which caused investors to run for the hills much in the same way that UK bond investors did when they heard details of Truss mini budget.

Since UK establishment is smart along with being loyal to the country, they got rid of dangerous Truss government. In comparison, our establishment doubled down and appointed Dollar Dar which scared investors even more and now Pakistan is being discussed as a likely candidate for bankruptcy.

So question is not why we are not talking in French or English? Rather question is why we are not communicating in our maadri zubaan i.e. Urdu. Development in UK and the graph below sheds a light on the issue.

In the graph below, white line shows avg yield on Pakistan dollar debt while blue line shows yield on Turkish dollar debt.

 

[Wood]

Since UK establishment is smart along with being loyal to the country, they got rid of dangerous Truss government. In comparison, our establishment doubled down and appointed Dollar Dar which scared investors even more and now Pakistan is being discussed as a likely candidate for bankruptcy.

Do we have FII outflow data for this? Does the FII outflow not correspond with federal interest rate hit in the US? All other developing countries seem to think so. Wonder why the same yardstick cannot possibly apply for Pakistan.

 

[Burger_King]

Get the hell out, retarded Indian.

 

[Sliver]

Pakistan's debt would have to yield higher to compensate investors for the risk of investing in Pakistan. Yet yield on Pak bond was around the same level to Turkish debt which was a sign of confidence on IK's economic policy.

could also mean low confidence on Turkish economy - Erdogan has been terrible in managing turkey's economy.

that being said. while UK's bond turmoil has been because of more recent baffling policies, Pakistan's descent into economic chaos has been slow, steady and almost irreversible.
UK's turnaround could be achieved by staying status quo and reversing the ill thought out Truss policies, could we say the same about Pakistan?

Pak needs a lot of structural changes to even get to a no-loss economy - let alone the immense growth required to get the economic opportunities for the huge population. there has been almost nothing in that front save from some steps from IK govt . However they also got quickly reversed with the huge subsidies on fuel that again came from IK's policies.

 

[Burger_King]

could also mean low confidence on Turkish economy - Erdogan has been terrible in managing turkey's economy.

that being said. while UK's bond turmoil has been because of more recent baffling policies, Pakistan's descent into economic chaos has been slow, steady and almost irreversible.
UK's turnaround could be achieved by staying status quo and reversing the ill thought out Truss policies, could we say the same about Pakistan?

Pak needs a lot of structural changes to even get to a no-loss economy - let alone the immense growth required to get the economic opportunities for the huge population. there has been almost nothing in that front save from some steps from IK govt . Howevver they also got quickly reversed with the huge subsidies on fuel that again came from IK's policies.

Yes, last few years of Sultan's reign have been a disaster for Turkish economy which is why until March, investors perceived Turkey to be a riskier investment than Pakistan despite Turkey's higher credit ratings.

But situation changed in early March when suddenly, Pakistan risk exploded. One reason, as you point was, the subsidy on petrol which was a very smart political move but not so much so in economic terms. However subsidy would have paid for itself if Pakistan got cheaper oil from Russia which a lot of countries did post Ukraine invasion. In addition, risk premium should have gone down after imported government raised oil prices. And indeed we did see decline in yield after Miftah reached an agreement with IMF but all his good work was undone when he was replaced by Dar. Investors remember disaster Dar's last tenure and they headed for the hills when his appointment was confirmed.

I also think there is more than that which meets the eye with regards to Pakistan bond selloff. I think weakness was due to shenanigans of powers that be. Unfortunately Pakistan awam lacks the smarts required to understand the great game being played upon the country. Ignorance is main reason for country's dire economic position. Reality will hit them in the face if decline is not arrested soon.

 

[SoulSpokesman]

@Burger_King

You are right. Far greater damages can be inflicted on a country via the currency and bonds markets, than by lobbing weapons.

The yield data you have presented is quite intriguing.

Regards

 

[Burger_King]

@Burger_King

You are right. Far greater damages can be inflicted on a country via the currency and bonds markets, than by lobbing weapons.

The yield data you have presented is quite intriguing.

Regards

Yes, what the graph shows you is modern day equivalent of raid on Somnath although somethings don't change even after a thousand years.

Among Ghaznavi's leading general was a "hindu" soldier by the name of Tilak. Thousand years later, "farangis" have been assisted by another son of the soil warrior who has betrayed society for personal financial gain.

Difference between the days of Somnath and today is that Somnath was tangible - i.e. raids could be observed. Movements in a two dimensional graphs are much harder to decipher especially by citizens of a country where education has never been a top priority.

Residents of medieval Pakistan had no answer to warriors from Central Asia. Modern day descendants of medieval Pakistanis seemed destined to follow the same path.

In their suits and ties, the modern day descendants of Central Asian warriors look much more benign. But the weapons they are hiding are much more dangerous.

 

[SoulSpokesman]

@Burger_King

BK sb,

What the citizens of Pakistan collectively have is a far greater awareness, courage and revolutionary spirit than Indians. What they lack is the knowledge of how to set things right.

Regards

 

[Burger_King]

@Burger_King

BK sb,

What the citizens of Pakistan collectively have is a far greater awareness, courage and revolutionary spirit than Indians. What they lack is the knowledge of how to set things right.

Regards

Juzbaa was enough when results of wars were determined by quality of archers and superiority of horses. Muslims even took the lead in deploying gun powder. But goras caught up and have gone to another dimension. Likes of Bilawal and Fazloo are not going to deliver when even Tipu Sultan failed. Ghulami is the likely outcome.