 Hello and let's talk about the stock markets. We are said to see some really tough times economically speaking both globally and in India. Most countries are likely to see economic growth come to a standstill or even contract. There are reports of how things may pick up in the next quarter but as of now this is purely speculation based on the idea that the COVID-19 crisis would have passed over by then. And this is talking about growth, we are not even going into employment or other social indicators. Now in the midst of all this the stock market seem to be doing surprisingly well. In fact experts are even warning about the dangers of speculation and fear that a bubble is building up. To find out more about this curious phenomenon we talk to journalist and market analyst Anandya Chakravarty. Here is what you have to say. Thank you Anandya for joining us. So we are in a very curious position in many parts of the world, maybe not so much in India where everyone is predicting all organizations are predicting that the economies of the world are going to go for a tailspin, things are gloomy, the prospect is gloomy but the stock market seem to be performing really, really well. So while many of us don't really get how it functions, how is it that when the economy is bad and is likely to get worse, the markets are in full form? You know that's the point because one of the things that we are seeing and it's happening in India as well because if you look at the last two and a half weeks the sensex has gone up about 10-11% from it's low in the middle of May. I mean it's gone even lower but if you look at it what has happened, 10-11% is just two and a half weeks, that's a dramatic return because if you get 10-11% from a fixed deposit in a year you will be happy and this you're getting in two and a half weeks from an economy which is completely shut down and we know that almost everyone as you said is predicting that the economy is in a tailspin, they will have a recession, they'll be negative growth, they'll be contraction this year. Now this is happening in India but even more so in developed markets especially the USA where people sitting at home, they've got their checks, many of them have probably got more than they can spend right now because remember there are while some of those restaurants and things have opened up again, they're still shut, most of the shops, restaurants etc are shut so you have some money and you can't spend it. In fact the savings, household savings in the US has gone up sharply in April and May partly because people are not spending and partly also because people are scared of spending. So these are the two things that we are seeing simultaneously and the US government has given a lot of money which we have discussed in the past which Indian government hasn't given and that has kind of resulted in marginal recovery for the US in terms of jobs along that last is a different question. Along with that central banks have basically pushed our money for free at zero interest rates. So there are many companies Prashant which basically completely, they have no business, they basically make no money. Take for instance Hurd's car rental, you must have heard about it. People rent cars across the world, it's there in India as well and Hurd's car rental has actually been running on losses for a very very long time. All that it has been doing and this has been going on for years and for a long time is it's been taking loans to pay back more loans because interest rates are so low you can take loans and pay back without having to literally pay any interest on it. So and after the lockdown it declared bankruptcy so it but Hurd's car rental stock price has shot up. There's another company which is a coffee chain in China which actually admitted to being a fraud. It admitted that in 2019 75% of its revenues were fake and this has come out in a very nice article on media that 75% it has admitted that the revenues didn't happen. NASDAQ gave it a notice for delisting because it says that these are wrong practices you cannot be listed. This company from after it nosedived apparently shot up 400%. There are absolutely unknown names, unknown names with no business at all. There's something called Chesapeake Energy if I'm not mistaken Chesapeake which again was talking for a bankruptcy and that stock went up sharply again. So there are people sitting at homes and you know one of the things that the internet age has allowed us to do is that we are all taking lessons on YouTube. So for instance I'm trying to learn chess while sitting at home and people are logging into these websites trying to learn what to do about stocks and one of the things that retail investors are often told is that in a market look for bar games when stock markets fall. The first when you buy a popular book on stock markets one of the things that you read is the markets when they correct you should buy. When the markets fall you should buy because good companies are available at much below what their real value should be and I think a lot of retail investors across the world have taken that to heart and they're just buying anything which is falling and you know there is this I think there is this term called FANG which is Facebook, Apple something and Google if I'm not mistaken. Sorry Facebook, Amazon something in Google I've forgotten what it is and there is a real estate company somewhere in China probably called FANG DD. Now people have started buying that company's stocks and shares because they think it is somewhere associated with FANG these big major companies that people would otherwise be buying. So retail investors are investing in things which they think will give them money and interestingly Prashant they have made money. Some of these stocks have gone up 1200% in two days 1000% in two days so people they're called Robinhood investors partly because there is a website called Robinhood.com I think which allows you to invest without paying any brokerage so these people sitting at home looking at the ticker on on various business channels they're investing and as my friend Prashant Nair of CNBC TV18 put out that in India there is a brokerage called Zerodha. Zerodha is the largest retail brokerage apparently because it probably the name suggests that it probably charges very little and their the average accounts that they were opening before COVID-19 has shot up by 300% during the lockdown so even in India people are buying putting in money. Retail investors are coming in because partly because they many people are actually thinking that maybe the only way to survive right now is put money in the stock markets. Let me if other people can make money in stock markets why don't I make money because I won't have a job my salary is going to go down so why not make money from the financial markets and this is a dangerous thing that's happening across the world. Yeah so to get to the dangerous aspect this is a classical definition of what I suspect is a bubble. So at what point does this bubble crash? You know the interesting thing is that I think that usually when there is retail participation this is called retail when the small person sitting at home invests we call it retail and when institutions invest a large high net worth individuals H&I's invest so they're called H&I investors or institutional investors. Every single stock market guru will tell you that what the country needs especially a country like India or anywhere is retail participation everyone should participate. Now everyone is scared because they are burning their fingers you see one of the things that happens in the stock market is when the markets go down some people bet on markets going down which I call the bears and I won't go into the details of it but it's called shorting the market so you can actually make money when the markets go down. Now everyone the people who are this what's called smart money guy people who know about the markets these people at bed the markets will go down these companies will go down like all the airline stocks will fall the you know things like yachts these luxury cruises they will fall so they've shorted them. What has happened is that these random Robin Hood investors have come and put in money into companies which have no hope of any business because they got beaten down and what happens is when people start buying stocks where smart money has shorted they were betting smart money has no option but to go and buy it back because otherwise they'll lose even bigger money so this is so you'd see that people have started complaining you'd see these news reports flooding out across the world about people saying that the real investors saying that oh this is very dangerous what is happening by the way what they do they don't say is dangerous because they basically take all the free money that is being handed out by the feds and the other central banks in the world and the amount of money that Fed has pumped in obviously we'll see even more money flow into the stock market because you know across the world one of the things that has happened is that the governments are scared that the if the markets fall it affects sentiment right so you might not be getting to eat but as long as your markets are up everyone thinks that the economy is doing extremely well so the reverse is also true when the markets fall even if your economy is doing well or the prospects of the economy is better then people get worried and we know that happened in 2004 when the UPA came to power you remember right then how the markets crashed when and then they came back and we saw that but there is a limit to how long say the central banks can sustain this kind of a soaring ice aspect you know that limit takes place when it goes into real investment if we if we look at something like what happened in 2008 right money was being given to people to buy homes who had no income right so they were getting loans and they had this kind of a thing that okay you're going to get a very teaser rate so let's say you take a home loan and you're told that the first 12 months you will pay just 2% right so the first year you'll pay 2% the second year you'll pay 3% and suddenly in the third year your home loan rate goes to 20% so in the third year people started defaulting because they couldn't pay they had no job now there are no jobs but for the first time cash is being handed out to people right and central banks seem to believe that it is better to just give money to keep the system floating and i think one of the things that has surprised people historically every economist is how much the stock markets go up even when the economies don't do well and i think that has to do with the way financialization of all assets has taken place because when you take i mean to use a bit of jargon here for our viewers who are probably aware of it that when you take you know one of the things that in Marxist economics for instance is believed is that in capitalism surplus is taken as surplus value as value right yeah but in pre-capitalist economies what happens is surplus is taken as product right because labor doesn't get homogenized labor power is not uniform so there is no way so you take it as product now most of the third world that we call the developing world is still not is still operating in the space where labor power is not labor is not as a use value homogenized there's no abstract labor in that sense so money is being collected as product as surplus product surplus product is being collected it's being converted into finance and that finance is sloshing around now this has very significant impact on capitalism per se because it does not take the form of capitalism as we know that the relationship between the person who extract surplus value and the person who's producing that surplus value and this has a significant impact in terms of the financial assets that we see and all surplus and that surprises economists i think that even left economists get surprised how are the markets going up because to my mind as long as exploitation as we in the economic sense of the term the taking out of surplus from direct producers takes the form of product it will get converted into finance or money that is not necessarily value as we know it in capitalism but it'll show up in the markets in the form of money and that that is certain senses has its cycles which keep coming back and back and back and you look at it 2008-09 crash we've not recovered from it the world has not recovered from it India has definitely not recovered from it but what happened our stock market actually went up from 9000 cents went up from 9000 and even at a bad time like this we're sitting at 34000 so so i'm saying that you look at the economy actually has come nowhere close to that since 2008-09 right thank you so much and you're enjoying thank you thanks a lot Prashat you know next segment we bring you a conversation between Vijay Prashat and Marxist intellectual Ajaz Ahmed Professor Ahmed talks about the protests in the US following the murder of George Floyd and also analyzes the nature of policing in a capitalist society the world seems to be on fire after the terrible death of George Floyd in Minneapolis they've been protests not only within the United States but around the world as people are really outraged by what they're seeing could you reflect a little bit on the death of Mr George Floyd and you know the level of unrest about the role of the police in American society one thing that occurs to me is of course it has been boiled um American police is in the habit of killing one that person per week on an average uh typically a man but they also killed me and that has been just building up Ferguson was the earlier episode where the again there was a very large uprising and all that which gave rise to the organization uh the you know Black Lives Matter so one of it is one of the things is that it has been building more recently uh secondly these are cyclical things that happened in America I have uh when I was living here in the 70s um the same sort of thing of extreme police brutality uh sometimes covertly it would be staged as a non-police person so uh and great protests around that and so on so part of it is that cyclical um the third thing that seems to me is that and that is where the difficulty I think is in comprehending that the you know everyone talks about white supremacy as if it was something pathological out there from which x number of people suffer Joe Biden just said 13 to 15 percent of Americans are bad people whatever that means but you know as if it's out there now white supremacy is second skin to in racial societies and a lot of these police are white supremacists running around with guns thirdly uh or whatever in order for them to do the kind of controlling of populations that they are required to do they're also given a great deal of protection that they can get away with anything and they expect that this is their right uh one of the very significant events in my just happened is there's a video there is an older man who's an old activist which must have been known a white man who must have been known to the police because uh he's an old man and he has been doing this in in Buffalo for some 30 40 years he must be well known on video the two policemen push him he falls down hits his head somewhere after much reluctance the police department takes action against those two and 57 of his colleagues resign from duty in solidarity with those two men who have been seen on video doing this so this is a kind of a privilege that the police has and has been given uh which is just part of the routines of American life and those policemen are now very surprised why something is happening to them now you know i have a picture i just from Long Beach not very far away from where i'm sitting where there's a black man standing his little daughter is sitting on his shoulders she's that small she's sitting on her shoulder and there's a white policeman with a gun aimed at that child hardly a foot away and it's open it's an innovative demonstration and by now they know that someone or the other will take a picture or a video or whatever so there's a kind of an impunity granted to the police force in this country and in most countries which itself needs to be scrutinized as part of how capitalist societies actually function in America now you're at a particularly delicate moment because you have a president who is whose work is incitement incitement of violence incitement of you know these good men who took over you know these white supremacists and so on and so forth who is deploying the army in the capital in Washington DC to against peaceful demonstrations with head of the american with the joint chief of joint stuff is with him so you know i have seen the united states in the early 70s during the vietnam war movement they were immensely larger gatherings but this kind of display of military power that he's staging this kind of incitement open incitement to white supremacists to to white militias and so on so it's also a particular moment in in the united states which is making it much worse and the more he influence the situation the more people are upset people are also very upset because they have no way now left in america at this moment to register their protests or they can't look to the democratic party to represent them so these are the unrepresented and represented in the belly of this so called democratic society who were not represented by anyone and so on so so here there's all of this boiling over in this country that's all we have in this episode of let's talk we'll be back tomorrow with the latest news developments of the day until then keep watching news click