Economist 2016.11.23

1.Why populism is in retreat across Latin America

Spendthrift: person who spends money in an extravagant irresponsible way

On the wane: become weaker or less

Populists, as self-explanatory, refer to people seeking to represent the interest of regular people, as opposed to “imperialism”. It became prominent in the political scene of South America since mid-20th century. Its characteristics include the lack of control and an opaque demarcation between the different roles managing a country. It arose from the wealthy class and in order to gain support from the people, they implemented policies that encouraged government spending, to an extent that inflation risk was neglected.

It was successful initially post financial crisis at the end of last century, due to the rise of China’s economy which brought forward huge wealth and liquidity. For the same reason as China slowed down, South America is suffering immense smash in its economy. As a result, populists were voted out, though not entirely removed in certain countries.

Ultimately economic growth and social progress say it all.

2.Why India scrapped its two biggest bank notes

Proliferation: rapid increase/ reproduction

Illicit loot: Illegal properties (taken from war)

Stash: store safely in a secret place

In a bind: in a difficult /embarrassing position

India demonetized the big ticket rupee notes and the official reason given is to fight the rapid spread of fake money. An underlying reason is to fight the black money market.

Last amount of rupees are floating in the market in the form of cash, either held by farmers who are tax-exempted; or the rich for money laundering. 

The scheme aims to target the rich but it has affected virtually everyone in the country, as people are queuing up to convert their notes.