Sree Iyer: Hello and welcome to PGurus Channel, I am your host Sree Iyer. This is news capsule for episode 38. I am with Shri Sridhar ChityalaJi. SridharJi Namaskar and welcome to PGurus Channel.
Sridhar Chityala: Namaskar, good morning, Shubodaya
Sree Iyer: Shubhodaya to all our viewers who are watching our program live and we thank you for your wonderful support for this program. We are in our 38th episode about six-seven weeks old and it’s been an incredible journey thus far and we are In the midst of somebody who’s very special because he is had wealth of experience working on the various bank and I have not properly introduced you to Sridhar ChityalaJi, he was a Chief Operating Officer of one of these biggest bank called Wachovia Bank, and he has held positions in high levels in many banks that are the world’s biggest banks. So, it’s always a pleasure to have him weigh in on the daily issues. It takes a lot of effort to put this thing together, because, you need to keep it really short and you want to make it substantive. So please subscribe to our Channel and then donate to our channel too, thank you so much.
Sridharji, what do you have for us today on the US Elections?
Sridhar Chityala: The US Elections drama continues, one can kind of say we are moving towards some form of discovery and resolution process. The word discovery, I use is for the evidence and the resolution is only when you have evidential data and you have mechanism is by which this can be resolved and we can have a new government in place. So, first and foremost, I think the GSA has formally asked Biden to establish the transition team and to provide the kind of support that happens generally with Trump’s endorsement. But, Trump was quick to point out that, you know, I have not conceded the election but the process must begin, doesn’t matter whether I continue or a new one comes in but, I believe I’ll be the guy continuing and which the same statement, he caught by Mike Pompeo when he addressed the media.
Now, let’s go state by state, as far as Michigan is concerned, they have certified the election but that’s going to be contested 3-0 of the two Democratic senators, the two Republican of which one abstained and one voted but, that goes into that will definitely go into the legal process.
The Georgia recount continues, sorry, Georgia recount will start today. I meant, Wisconsin recounting continues on the fourth day, there’s a lot of kind of sluggishness and also complaints from either side on whether it is being allowed to process harmoniously.
With regard to Dane County and Milwaukee County’s is the big kind of contentions in Wisconsin.
With regard to Nevada, it seems to be still in the legal land and that’s a state where you have, you know, a lot of issues around dead people voting and electoral roles being issued to people who should not have received it etc.,
Then, you have potentially Arizona and even New Mexico and Virginia is being talked about as something that could come under contention in terms of the election outcomes.
So, while that goes on, Democratic Party, as well as the media and everyone, has got behind Mr Biden and saying Trump should concede and Trump should come. There is a lot of asymmetric press coming out, you have the Democratic and the left views and then you have the Republican view. Then, there is one more important thing is Pennsylvania, which we forgot. Pennsylvania, 110 to 79 or 110 to 90, some big number. They think that they should do complete recertification of an audit of the votes and state legislature. In the meanwhile, Trump’s legal team has moved to the third circuit house which is to contest the certification of the elections basically because of the number of fraudulent ballots or a number of Illegal ballots, as they say, taken into a count. I think they had a deadline yesterday or today 4 p.m. and Mr Alito would be the appointed judge, who would look into the specific case.
In anticipation of many issues, the Supreme Court has appointed, Mr Clarence Thomas, Brett Kavanaugh, Amy Barrett, and Samuel Alito as the four circuit judges for the four contested States, Michigan, Georgia, Wisconsin and Pennsylvania so, that’s the election process. The transition team or the Biden team has been announced, I would call it as Obama.
Sree Iyer: Sorry sir, if I could come in for just one-second sir. Viewers, in 2000, the election was contested just in one state and you saw how much drama that played out and now we have at least six states in contention. So this is there’s a lot of drama left in the next few weeks, just fasten your seatbelts and enjoy the ride. Sir, please continue.
Sree Chityala: So, the transition team is coming into place in Biden, I called it as Obama version 2. So, most of the people from the Obama team are here, some very eminent personalities. Janet Yellen is nominated, on the expected lines, she is the treasury secretary, undoubtedly a very dominant figure in the US markets and global markets. She was the FED Chair and did a tremendous job in managing the FED. She’s an absolute kind of academic copybook player and so, therefore the markets will embrace because markets know her very, well, that’s a very significant announcement. Anthony Blinken, who is supposed to be again an Obama person who is well known. He is the State Secretary the two important the roles, that’s been announced. Mayorkas has been announced as the national security, he’s a very well-known figure. Latino occupying the position is very very good. Avril Haines has been appointed as the national Intelligence, she is the first woman to lead the intelligence Community. Jack Sullivan, who is again from Obama Hillary Clinton time, he’s the National Security advisor. Linda Thomas Greenfield very experienced Diplomat African-American black woman, she is the ambassador to the United Nations another important position and John Kerry who negotiated the Paris Accord is coming in Hillbilly National Security Council and he’s coming in as an advisor who may continue the negotiations with Paris Accord. So, when you look at the composition of the team, it’s clearly, Obama version 2. It looks like Bernie Sanders has been missed out, he wanted to be the labour secretary seems to have been missed out because the AFL-CIO unions seem to have opposed, that’s what the Press says, at least the couple of media outlets have said, but, nothing formal has come out. So, you have a good cabinet that Biden has established.
Sree Iyer: Sir, one in-depth look at Yellen’s appointment, she is very strong on the monetary policies isn’t it? But as a treasury secretary, you need to also have knowledge of fiscal policy because you are really going the other way. I mean monetary policy set by the FED, fiscal is usually by the government, so she’s actually switching roles now. What are your thoughts on that sir?
Sridhar Chityala: Without sounding provocative and controversial, you know, there’s no other way to put it across. It is a very interesting announcement, it basically established the philosophy and the thinking behind the administration which is more, government-led and government-managed types of programs, which is typically socialist in nature. So, they will try to push more and more, if you recognize this, you are talking about more stimulus, you are talking about more taxes, you know, 4.7 to 5 trillion dollars of new taxes. You are talking about, signing up on Paris Accord 450 billion. So, when you look at some of the so-called fiscal policies, its already like fairly established, it’s more like the government push type of programs. Contrary to that would be more to say, you know, how do you retreat the economy, by saying, how do you cut your deficits? How do you reduce taxes? How do you put more money into the hands of the people? How do you kind of determine the best tax harmony programs afford the industry? How do you look at the revenues, while you cut the expenses on the Balance Sheet? How do you not spend money on non-economic related programs that have got this fuzzy logic of environment and this and that and so on? None of them is proven. For example, yesterday I touched but I didn’t get into it. 25 years of car decarbonisation program in Japan has not yielded any kind of significant result. So the point that I am trying to make is, you have asked a very good question, it’s more a monetary push rather than a fiscal balance sheet model, very different to Steve Mnuchin.
Sree Iyer: Yes indeed. So let’s see how this plays out at least the government seems to be taking cognizance of the fact that they need somebody who’s probably a fiscal conservative if I have to put a tag on her and then we have to see how this plays out.
Sridhar Chityala: They want a fiscal liberalist, not a fiscal conservative, they want a fiscal liberalist.
Sree Iyer: They do but have appointed a fiscal conservative in my opinion, but I could be wrong.
Sridhar Chityala: Yeah, not a conservative, she is a monetary liberalist ad fiscal liberalism. So what do you think, fiscal liberalism is add everything to the total debt.
Sree Iyer: Sir, let’s take a quick look at India, looks like there’s a lot of activity around its BrahMos missile. What are your thoughts on that? And I have another follow-up question on RBI and private companies being allowed to set up banks. So please go ahead with the Brahmos situation sir.
Sridhar Chityala: Well, I think that one of the major areas in India identified as the strategic pillars of growth is defence, which is namely defence experts as well as the indigenization of defence and developing homegrown programs. I think they also announced their most recent a torpedo which will be used in the naval battles along with the navy. So BrahMos missile seems to be the plank the coup of Indian government and they have various forms of BrahMos missiles. It achieves two specific objectives one it indigenes and produces something that it becomes a weapon of choice especially in the Western border as well as in the northern border so it seems to be working so, therefore, they say we’re going with it, so that’s number one. Now, they have announced land-based BrahMos missiles. It also has become the most important vehicle from an export point of view. I think we discussed, potentially the Philippines acquiring this. This is after Vietnam acquiring. I wouldn’t be surprised, I think Indonesia has been in discussions, it probably will now extend to Taiwan, power me, making China, even more, irate because, between United between the United States and India, people who are supplying these type of missiles and defence equipment is to defend Taiwan against intruding airspace from the Chinese. So, therefore, I think that is also a big export vehicle. That seems to be the hallmark weapon that India has, so that would be my answer.
Sree Iyer: Sir, on follow-up question, there have been some comments from Viral Acharya and Raghuram Rajan that allowing private companies to run Banks is a very bad idea per se without looking at what the charter is, which product these companies can sell in their bank, I don’t know how they have come to their conclusions. You have been a banker for many many years. What are your thoughts, sir?
Sridhar Chityala: Well, I think before you play any specific idea as a good idea is a bad idea there should be some kind of a framework, for example, in the United States, you have industrial Banks here with a limited license, they’re not allowed to issue notes, but they can raise capital through money market and CDs and those types of instruments which they used to fund their own balance sheets. They have an industrial bank. If you take India, I believe that a large number of companies used to issue their own debt instruments attractively priced and rated now, then it was not, they are fixed deposits, but they are backed by the company’s balance sheet rather than backed by, so, in my view why are you creating? you are creating basically because what they’re saying is rather than shifting the NPA to your large institutions, okay, if you’re so creditworthy, okay, create an additional license within your enterprise and see whether you can go to the public and raise the deposits and then maybe even raise loans, also issue loans to some people who are in your ecosystem.
For example, trade finance, trade finance in the procurement side between buyers and sellers. There’s always these letters of credit that are going on intermediated by the Banks. But these guys can do if they have a balance sheet. So what it does is that it is also conceivable, the prototype that they’re looking at is not to take the bank’s back in to become a single-vehicle of lending especially as the economy grows. India took 50 years to become your one and a half-trillion dollars economy, then it has taken 14 years for it to go from one trillion to three trillion dollars economy, 2.94, of which the last trillion came in less than six years. So, therefore, it has grown and in the process, it has identified a number of documents. So it has an aspirational desire to grow from a three trillion to five trillion economy. That’s quite a remarkable number in the next five years. If you ask my good friend, Mr Pai, he will tell you by 2026 we will be $5 trillion economies, right now they are around 3. So that’s a very short span, so you need monetary inflow or you need capital. So how does the capital formation occur, if it is through tech or equity, how does the debt part of it takes place? Equity is well-established, how does the debt part of it takes place beyond the investment side, right? So whether these institutions can be harmonised to create their own structures. So I think that is an interesting idea that needs to be looked at rather than outrightly kind of condemning it.
Sree Iyer: Thank you, sir, on last note before we wind up today’s program, an update on covid vaccines and where things are some questions about how the vaccines actually make you immune from Covid.
Sridhar Chityala: I think it’s great the region around vaccine has been given an expedited FDA approval. It looks like it is going to be in the market this week. It seems to have had a 70% success rate. That was the one taken by President Trump. There was a lot of controversies because why he took and why it was not given so given that, The performance of Pfizer, Moderna, you have the Eli Lilly, you have also Johnson & Johnson. So it looks like their vaccines are in play and they’re coming in sometime by December 21st or so. They expect close to 20 to 40 million people as a big number to be vaccinated by mid-next year in the United States. I don’t know the data for all other countries, but the story is that at least the United States is moving quite rapidly at least with Trump program. When Mr Biden comes in what exactly is his program, we will get to know. He has already appointed a czar is for leading the program. The other impression is that the world is now conscious of vaccine and everybody wants Global coordination and China also made its announcement in the most recent APEC conference that it would be a supplier to the world if required. The general theme is that each of these countries needs to be vaccinated before seamless travel and all those things can begin to happen. So, I think we are well down the path. With your question and whether it creates any genetic imbalances whether there are problems, I don’t know whether I’m the most competent person to comment, but there are mixed reactions and theories. That’s why people always say having a natural immunity, ayurvedic or therapeutic modulation in conjunction with traditional is helpful, but I’m not sure whether all countries will follow me. India may be a leader in that and maybe eastern Nations will follow, maybe some European nations may take the same route, whether the United States will follow, I don’t know. But you’re right, any natural immunity booster has very minimum side effects.
Sree Iyer: Thank you very much, sir and that wraps up today’s episode. We will see you back tomorrow morning bright and early and thanks for joining and do subscribe to our channel. Namaskar.
Sridhar Chityala: Namaskar and thank you.