Loosing streak for the Grand Old Party

So the loosing streak for the Congress continues………….. latest one is Karnataka which was once it’s stronghold.
It has been two years since they last won a state election!

I wonder what has happened since last two years .Of course congress has been doing all the right things at the centre .OBC reservation, NREGS, Farm loan waiver the list is quite impressive..Their governance has been top class at the centre. It is then puzzling as to why the elction gods have been at the other end for them.

I think there are no easy answers. Some of them are clear and some of them are not.

Let’s understand the Vote bank of congress
SC/ST and Muslims ...
SC/ST are moving away from the congress as they find attractive options like the BSP .BSP may not be successful outside UP , but what is pinching congress is that the votes are getting divided.
Ther muslims have not come back as they desired.

Poll and campaign management

What is amazing is the fact that vote bank of congress is not translationg into seats , whereas it is for others.
The congress has this policy of not projecting a Prime Minster or Chief Ministerial candidate.This is a tradition that has been created to mainatain the hold of the so called “ High Command” so once they win they can impose any candidate that they like. This is now proving to be counterproductive.Imagine you do a project successfully in your organisation and the booty of the success goes to someone who has not done anything.You’ll simply quit .Now apply this formula to Congress . The state level poll managers neither seems have the right power nor the incentive to perform as they are not sure that they’ll get the benefit. This needs to change . Once the right people have the right incentives the results will follow.
The campaign management seems to focus on a few people like Sonia Gandhi and Rahul and not from the state leaders. This is also having a negative impact.Local issues it seems have been forgotten and big ticket issues are being addressed which do not have much of a mass appeal.
Basically it seems that opponents are having a stronger desire than congress in campaign management.

The Umbilical Cord

The Nehru/Gandhi cord is a as much a liability as an asset as there is noone who can speak freely and fairly against the miastakes of the leadership . Hence mistakes are being repeated .

There is something in Congress favour:

The congress is hopefully learing from each failure and they may not repeat the mistake in general elections.
Anti incumbancy in states where elections are going to be conducted is in congress's favour.
Vote back has not shrunk much . However it is not translating into seats as mentioned earlier . This translation can be done if good tactics are applied.
Momentum against congress may actually turn in their favour as negative votes are cast in their favour.

The PetroDollar Business

Last week I read the news of Iran moving it's crude oil trade completely to Euro and Yen and exited Dollar. This is indeed a predictable news and was coming for sometime now.

Lets understand why.

The dollar derives it's strength and demand from being the base currency for International Trade ( and sometimes national as well!) across the world and main contributor to this is crude oil trade. US itself runs huge trade deficits ( now at record Levels) which essentially means it buys more goods and services than it sells. Part of this deficit( and hence US consumption) is funded by the rest of the world itself in the form of purchase of US treasury bonds and capital and other investments.The rest of the world also maintains $ as Forex Reserves .The world $ Currency reserves are estimated at about 10,000 billion.

Hence an important fact: The rest of the world needs to sell goods and services to the US and it not necesasary for the US to reciprocate the same . It can simply do by printing Dollar . The rest of the World needs to maintain the vaule of $ as they have invested heavily in terms if $ bonds , reserves and other $ assets. This means US literally gets a lot of products and services for free . This is an amazing free Lunch that every Great Power aspires to have.
Of couse govermenets and monetory authorities across rest of the world know about this fact.

Now imagine rest of the world for some reason stops trading Crude Oil in Dollars. The demand for Dollar slumps so does the value of the dollar .As the Dollar value dips ,more countries move their curde oil trade on other currencies which effects further sharper slump in Dollar.

Such doomsday scenario thinking has prompted the hostile nations (to US) like Iran to move oil trade to Euro and Yen.( Many infact attribute this kind of fear led US to undertake it's Iraq adventure as late Saddam planned to move Iraq's oil trade to Euro before US invaded Iraq and there's a lot of credibility to such an argument.) This may prompt Saudi Arebia and Russia and many others to follow suit . The only issue here whether Euro/Yen or any other currency have the mattle to prove effective alternative to Dollar.I think Euro has a much better chance given the size and stability of the European Economy.

Most probaly if dollar slumps , it's be a gradual process over years and not a sudden phenomenon.

We in fact have the example of UK which lost it's superpower status in 20th century as it was unable to maintain the value of Pound sterling after second world war as the demand for Pound slumped after Bretton Woods Accord.