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The Indo-US Nuke Treaty : Ask Just Two Questions

Why is India pushing for the Nuclear Agreement with USA ?

&

Why is USA pushing for the Nuclear Agreement with India ?

despite there being sizeable opposition in both countries to this Deal

Let’s address the first question.

India,clearly needs significant additional Power Generation to sustain it’s GDP growth for the next few decades.In fact from the current US $ I Trillion economy ,if India grows at 7% to 8% CAGR it will cross US $ 4 Trillion in the next 20 years.Any higher rate of growth will see it becoming a US $ 6 Trillion economy in this period !

‘Powering India—the road to 2017’, a report by global consultancy firm McKinsey states that India will need $600 billion to meet electricity demand that may triple to 3,35,000 mw by 2017 and it will face a huge shortage of power if it does not act now. 

India’s Hydel and Thermal Power Generation Capacities and those generated by Altrenative Sources like Wind and Solar would just not be enough to cope with an expected Power Demand

So what’s the opposition about ? ! Well for One it’s the way the UPA Government has gone about this whole process.Full Transperancy and Communication from Day One would have been a better idea.

A more compelling argument is that many believe that India will surrender some part of it’s sovereignty in that it will not be able to conduct further nuclear tests or it will risk facing stoppage of the supply of uranium which is the feed to the reactors.Australia,who holds 25% of the world’s uranium reserves, has already taken a  U turn as the Labour Party has come into power and stated that it will not supply any uranium to India as India had not signed the 1970 Nuclear Non Proliferation Treaty.The risk is that if supplies do stop there is very little “corrective measures” (Draft IAEA Agreement) that India can take to keep the reactors in operation….The Reactors would at best serve as gigantic storage Bins…like the silos that store Wheat!…and they would have cost India over US $ 40 billion to build

The arguments on higher creation costs (Nuclear :Rs 6 crores/MW against Thermal :Rs 4 crores/MW) and safety issues (Chernobyl Disaster in 1986 in Ukraine was more due to lack of safegaurds prescribed by IAEA and the Three Mile Island Leakage was controlled by conventional means) are less compelling.

Now let’s tackle the second question as to why USA is pushing for this deal.

Clearly USA benefits two fold with this deal. read more

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USA : Further Major Financial Earthquakes expected !

It’s just a matter of time for another major Financial Earthquake in USA and the aftershocks will be felt all over the world…preshocks are already visible…Citibank,India is selling of prime residential property all over Mumbai and is rumored to be looking for buyers for it’s Eight storeyed Bandra Kurla Complex Head Quarters

In USA it’s a situation of the Pot calling the Kettle Black…those in Glass Houses themselves are throwing stones at others !

Lehman says watch out for Fannie Mae and Freddie Mac,the two biggest refinanciers in the mortgage business…they will need US $ 75 Billion just to meet their committments

Watch out for Lehman itself,say sources in the Capital Markets

Merill Lynch warns that it is not an impossibility that General Motors could announce bankruptcy!

Fitch has just downgraded Merill Lynch

Bear Stearns dropped a Zero on the weekend some time ago when it closed on Friday at US $ 30 and then announced that J P Morgan was bailing it out and opened at US $ 3 on Monday! 

Citicorp has already provided US $ 40 billion and is planning to raise billions in fresh equity,sell off assets,close branches and lay off people all around the world to shore up it’s rapidly weakening balance sheet

Every Week as Friday comes,there is a real strong fear that another Bear Stearns like scenario may be announced by a major Financial Powerhouse

Read More »

3 I’s…Infosys,Inflation and IIP Numbers announced today weakens sentiment further

Sensex has reacted sharply by over 200 points and trying to stay above 13700 at 12.49 pm as the following 3 I’s take effect…further reaction expected 

  • Infosys declared quarter ended June 2008 numbers on expected lines today but did not raise Dollar EPS guidance significantly….only a cent higher to a range of  US $ 2.32 to US $ 2.36.Share Price has  dropped near 4% to Rs 1736 at 12.49 pm from yesterday’s closing of Rs 1806

 

  • Inflation for week ending June 28,2008 shows a surge to a 13 year high of 11.89 % against 11.63% for the week before

  • IIP  (Industrial Production) Numbers just announced show a shocking fall growth rate in May 2008 to 3.8% against yoy of 10.6% with Manufacturing showing just 3.9% against 11.3%
Read More »

Sensex trying to resist Dow Pressure…reluctant to go below 14000…don’t get fooled by any rally

On Cue,following Dow’s 2.08% fall yesterday,the Sensex opened lower this morning at 13861.60 only to quickly regain ground to cross 14000…Don’t get taken in by any rally…remember it surged to 18000 after dropping below 14000 earlier this year…there is going to be some more pain as financial earthquakes will continue to rock USA and cause severe aftershocks worldwide….economic and political spoilers are clearly strong and they yet have to play out their full strength

It’s too risky to play the Sensex or Nifty..the uncertainty and nervousness and volatility are clearly visible……if at all you want to beat the trend adopt the bottom up approach by zeroing on selectively on certain scrips that are poised to surge based on specific circumstances and events….Zandu for example has more than doubled inside a month from Rs 6000 levels to Rs 16000 levels as promoters are aggressively increasing their holding to stave off hostile takeover bid from the Emami Group

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DOW will continue to DICTATE our SENSEX…expect big fall today

SENSEX notched a gain of 615 points or 4.6% to close just under 14000 at 13964 yesterday

The Dow Jones Industrial Average lost 237 points or 2.08% to close lower at 11147 yesterday

Expect the SENSEX to wipe off yesterday’s gains today…Other Asian markets too have opened lower on cue this morning  

Read More »
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