Do we know what we know?

Every once in a while our beliefs and conventional wisdom are challenged. It is then upon us to either rubbish what we don't know, as incorrect or indeed, to take a step back and review the new knowledge which may be potentially disruptive. With a lot of talk around disruptive technology viz. AI, EV etc. one is forced to consider the changes which could potentially have an impact on our lives, in our lifetimes.

1. How much of India is actually urban? Census data suggests that 31% of India is urban but satellite images suggest that India’s urban population is more than twice that figure

Imagine, our current belief is India’s urbanization is a story which is yet to play out. When one compares with China, migration for livelihood was one of the key growth drivers including requirements for infrastructure growth, housing and supporting service industry. Back home, we believe, or have believed thus far that urbanization is yet to play out.

If we are more urban than what we believe, it could potentially require policy changes at the government level to begin with and strategy changes for businesses. How would one think of demand environment, affordability, penetration etc. for consumption under the alternate point of view.

Could this necessitate the way the marketer thinks, the sales team focusses and advertiser targets?

2. Preventing the next crash: Economic downturns can now begin in the markets and not just the economy

https://blogs.timesofindia.indiatimes.com/toi-edit-page/preventing-the-next-crash-economic-downturns-can-now-begin-in-the-markets-and-not-just-the-economy/

In this rather interesting argument Ruchir argues regarding a possibility that considering global financial assets are now worth $250 Tn which is 330% of global GDP, the next downturn may not come from the economy, it may, instead come from the capital markets!

He argues, the major challenges central banks were after are under check viz. inflation and in so fuelling growth they accelerated the creation of unprecedented financial assets. In an interview I heard earlier today, he went on to comment, this time around, it could well be the tail that will wag the dog.

We are so used to thinking of the capital markets as a barometer for the economy that the article mentioned above could change the very way we, nay the Central Bankers may need to think about their priorities.

As investors, if the above argument does play out, could it mean the liquidity fuelled equity boom may have already have seen its best days? One shudders to imagine a world where an argument even in that general vicinity becomes a reality.