tag:blogger.com,1999:blog-71232267932617058262024-03-24T18:31:55.689-05:00Common Man EconomicsPurpose of this blog is to enable Common Man think about Big Picture of Economics.Unknownnoreply@blogger.comBlogger40125tag:blogger.com,1999:blog-7123226793261705826.post-56864898034679095512014-05-28T01:14:00.000-05:002018-11-10T09:38:00.688-06:00Inflation and Politics. – 3 Phase Plan for India’s Economic Revival<div dir="ltr" style="text-align: left;" trbidi="on">
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Inflation and Politics. – 3 Phase Plan for India’s Economic
Revival<o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Prime Minister: “Our GDP grew by 10%” <o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Common Man: “OK …Good”<o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Prime Minister: “Our GDP Shrank by 10%” <o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Common Man: “OO Better luck next time” <o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Prime Minister: “Prices reduced by 10%” <o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Common Man: “WOW that helps me a lot I will do everything to
keep you in power”<o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Prime Minister “Prices Increase by 10%” <o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Common Man: “Grrrrr…I will show you my Vote power next time”<o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">To make it simple Inflation is what
matters to Common man and poor people in particular. It Does not mean GDP
growth is not important but Inflation is MOST IMPORTANT to him. We heard this “Loud
and clear” on Largest Democracy Experiment on Planet earth. Although there were
many other factors. To me this was MOST IMPORTANT Factor.<o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">The biggest challenge in front of
government is of course to curb it. Based on my understanding there can be 3
phase approach to solve this mammoth challenge. Of course writing blog is much
easier than running country but still this is good intentional thought process
which may give something useful.<o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">So here is this 3 Phase Plan for economic revival of India
in next 5 Years.<o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Step 1) Understand the Big Picture and Problem.<o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Before Going into solution let’s try to see how we got this
Problem of High Inflation and how big it is... At country level there are 3
recipes of inflation.<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "arial" , "helvetica" , sans-serif;">1)
<!--[endif]-->Trade deficit (Import more than Export) <o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "arial" , "helvetica" , sans-serif;">2)
<!--[endif]-->Fiscal deficit (Government Spend more than it
earns)<o:p></o:p></span></div>
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<o:p><span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></o:p></div>
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<!--[if supportFields]><span style='mso-element:field-end'></span><![endif]--><span style="font-family: "arial" , "helvetica" , sans-serif;">What?
We buy more than we sell and We Spend more than we earn how?? Simple (We print
money for balance like every other country in today’s paper money world.) <o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">What Printed money gives us?? – INFLATION...<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "arial" , "helvetica" , sans-serif;">3)
<!--[endif]-->Artificially Low Interest Rates.<o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Interest rates have been always less than real inflation
since 2009 when Inflation super cycle kicked off in India. Thanks to short term
thinking of then FM Pranab Mukharjee and ever brilliant P Chidambaram.<o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">In short we got all 3 sources of inflation in big way which
got us in stagflation (High Inflation Low Growth) </span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Typically it leads to one of
the below roads..<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "arial" , "helvetica" , sans-serif;">1)
<!--[endif]-->Deflation First then Economic revival and
Prosperity.<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "arial" , "helvetica" , sans-serif;">2)
<!--[endif]-->Hyperinflation and complete destruction of
economy.<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "arial" , "helvetica" , sans-serif;">3)
<!--[endif]-->Continued Hyper Stagflation..<o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><b>What should be best way to get out of it …<o:p></o:p></b></span></div>
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<b><span style="font-family: "arial" , "helvetica" , sans-serif;">Phase1) Use Bubble to
make Money (0-9 Months.)<o:p></o:p></span></b></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"> This
should be straight forward without any hesitation... Make Money. Although it’s
always difficult to actually make it than said.
Country like India however has lots of obvious options like Suggested by
Subramanian Swamy.<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "arial" , "helvetica" , sans-serif;">1)
<!--[endif]-->Auction 2G, 3G 4G whatever G...<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "arial" , "helvetica" , sans-serif;">2)
<!--[endif]-->Auction Cola Blocks, <o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "arial" , "helvetica" , sans-serif;">3)
<!--[endif]-->Get engages with Swiss and Other governments and
get money back<o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Some of the other options can be<o:p></o:p></span></div>
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<div class="MsoListParagraphCxSpFirst" style="mso-list: l0 level1 lfo3; text-indent: -.25in;">
<!--[if !supportLists]--><span style="font-family: "arial" , "helvetica" , sans-serif;">4)
<!--[endif]-->India has whopping 21 Million NRIs... Offer one
time 500 USD “Green Zone” pass to them that will remove Import restrictions
from max 25000 INR to 500000 INR / NO Restriction. Anyways it’s a corruption
paradise how much money government of India truly get is a big question. Even
if 20% NRIs opt for it, it will be whooping 2 Billion USD... If all OPT it’s 10
Billion. (Frequent flyers can also opt for it.) Once done, cut the staff from
that department & stop wasting money.<o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></div>
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<!--[if !supportLists]--><span style="font-family: "arial" , "helvetica" , sans-serif;">5)
<!--[endif]-->Indian Railways, and many other Organizations
have massive land sitting Ideal. Give it for 99 Year Lease as long as there are
no security / scalability issues involved.<o:p></o:p></span></div>
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<!--[if !supportLists]--><span style="font-family: "arial" , "helvetica" , sans-serif;">6)
<!--[endif]-->Dis – Investment. PM Elect Mr. Modi once said “Government
has no business to be in business” If he follows it lots of ever sick / even
better managed Government companies can be sold resulting in huge cash.<o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></div>
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<!--[if !supportLists]--><span style="font-family: "arial" , "helvetica" , sans-serif;">7)
<!--[endif]-->Engage Japan, US, Germany, UK they have Money
but no growth. We have huge growth potential but no money so its perfect
partnership.<o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></div>
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<!--[if !supportLists]--><span style="font-family: "arial" , "helvetica" , sans-serif;">8)
<!--[endif]-->Find creative ways to make money NOW...<o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Why NOW – Well Economics is always funny although many
(Including me) believe that Indian Economy is in terrible shape, the mainstream
sentiment is very positive that’s great time to make money. Moreover Sentiment
in country is badly negative on Black money so crackdown on Biggs should be OK...
<o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">How much money we need (Refer to chart above.) Total India need 254 Billion USD / year to
balance so called twin deficits. Per
capita its 205 USD / annum.<o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Is it really easy? May be not but that’s where man with
strong will power come into play. With his Powerful arm he can fill government
treasury with money... During whole this time 6-9 Months Inflation won’t ease
considerably. Communicate to people to be patient. They have seen 7 years of It
6 more months. However don’t reduce interest rates at all.<o:p></o:p></span></div>
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<b><span style="font-family: "arial" , "helvetica" , sans-serif;">Phase 2) Burst Real Estate
bubble to kill inflation. 9- 18 Months.<o:p></o:p></span></b></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">9 Months – 15 Months this is where putting
breaks should begin. It’s a Bitter pillow which we all have to swallow. Indian
Economy has not seen recession since 2001. This is NOT A GOOD sign. Economy
need cooling to curb inflation. There is massive monetary inflation out there
led by “Artificial Real estate Bubble”.<o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">To curb the inflation India should take hard tone on Builder
/ Real Estate Infra Lobby. Companies like Unitech / DLF have been lobbying
really hard with previous government. And just looking at it one can smell “2G
like SCAM” which is not exposed yet. Expose it... STOP LOAN FORGIVENESS/ (RESTRUCTURING)
to BUILDERS. And ask them to sell unsold flats at whatever rate and repay Loan ASAP!!
If they don’t send them behind Bars. It may sound politically incorrect but country
in which people die simply out of hunger every day Should have Capital punishments for
Frauds of Big Quantum. <o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Anyways - Will it create Bad assets in Banks YES…SO WHAT?? “THEY
ARE BAD” More you delay worse it gets. Will it create scenario where people
will repay more in terms of loans than market value YES… SO WHAT... Let these visionary Buyers
understand that nation is built on Industries not by buying Homes and let them
face burnt of Congress Decisions and propaganda. It’s not BJP who encouraged people
to buy Homes. It’s Congress who created this massive Domestic Super Bubble. <o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Expose it burst it... And believe it or not that is the root
of Indian Inflation today.<o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Getting “Criminal Real estate lobby off ventilator (stopping
Cheap / restructured RBI Loans) itself should burst the bubble now but if it
doesn’t raise interest rates and burn the whole inflation” <o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Will it create recession Yes SO WHAT?? Recession is like
wild fire and is absolute must for long term economic revival. It will create
world is coming to an end scenario but once all mal investment gets purged, “<u>People’s
trust in currency is restored and right message is sent</u>” then economy will
grow at unprecedented rate. <o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Pranab Mukharjee avoided this P Chidambarma avoided this and
you saw what happened to their party now... BJP should better face it... <o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;"><u>Remember People love bitter truth than sweet lie. India
has shown that it’s not bagger’s country who will vote for free food and free
money.</u> They know there is something wrong there in Real Estate. Expose it
communicate it well. <o:p></o:p></span></div>
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<span style="font-family: "arial" , "helvetica" , sans-serif;">Meanwhile since Government has money they can give tax
breaks to ease pinch of raising rates. It’s all about communicating it well and
doing right things...<o:p></o:p></span></div>
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<b><span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></b></div>
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<b><span style="font-family: "arial" , "helvetica" , sans-serif;">Phase 3) Real Growth
(Achhe Din) <o:p></o:p></span></b></div>
<div class="MsoNormal">
<span style="font-family: "arial" , "helvetica" , sans-serif;"> With its
demographics, visionary leaders like Mr. Modi, Economy will bounce back like
phoenix bird and it may experience Export led 12 – 20 % Growth (Without
Inflation) for few years provided Deficit is completely avoided. All aggressive
plans of Bullet train, becoming world leader in Food export can be realized in
this.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "arial" , "helvetica" , sans-serif;">Just look at Export / Capita of Top 20 Export countries.
India has a Huge Potential to double / triple its export in 5 years which
should change the picture completely.<o:p></o:p></span></div>
<div class="MsoNormal">
<o:p><span style="font-family: "arial" , "helvetica" , sans-serif;"> <table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKK-J2c5vDcT-3DijE29HSuT5C4XwGbsU6eVVO556EylYKS06RDqwjsnvNGeJrQFSb9ZgZHnVKzC5TobfZjlgakWI82to3bbUZatrxX8aLmGK7mU0p4fYcUum3FSlfWXZhID497LIsPp0/s1600/export+per+capita.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="186" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKK-J2c5vDcT-3DijE29HSuT5C4XwGbsU6eVVO556EylYKS06RDqwjsnvNGeJrQFSb9ZgZHnVKzC5TobfZjlgakWI82to3bbUZatrxX8aLmGK7mU0p4fYcUum3FSlfWXZhID497LIsPp0/s1600/export+per+capita.png" width="320" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Export per Capita</td></tr>
</tbody></table>
</span></o:p></div>
<div class="MsoNormal">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><v:shape id="Picture_x0020_8" o:spid="_x0000_i1026" style="height: 273pt; mso-wrap-style: square; visibility: visible; width: 468.75pt;" type="#_x0000_t75">
<v:imagedata o:title="" src="file:///C:\Users\Amaresh\AppData\Local\Temp\msohtmlclip1\01\clip_image003.png">
</v:imagedata></v:shape><o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "arial" , "helvetica" , sans-serif;">Also Remember Global inflation has not yet kicked off once
that kick off and if India has passed the Recession India may very well get
massive investment inflow on markets as well as currency. Anyways timing is
always a speculation but I guess focus on inflation and curb it in whatever way
is absolute must!<o:p></o:p></span></div>
<br />
<div class="MsoNormal">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "arial" , "helvetica" , sans-serif;">With 3 years of amazing growth post-recession, Government
should find it easy to get re- elected and maintain growth of economy for
another few years.</span><o:p></o:p></div>
<div class="MsoNormal">
<span style="font-family: "arial" , "helvetica" , sans-serif;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "arial" , "helvetica" , sans-serif;">Thanks</span></div>
<div class="MsoNormal">
<span style="font-family: "arial" , "helvetica" , sans-serif;">Author.</span></div>
</div>
Unknownnoreply@blogger.com4tag:blogger.com,1999:blog-7123226793261705826.post-16481987613713875842013-06-14T18:48:00.001-05:002013-06-15T23:07:10.033-05:00Its Official!! Central Bankers have "Bubble Blindness."<div dir="ltr" style="text-align: left;" trbidi="on">
<div dir="ltr" style="text-align: left;" trbidi="on">
<span style="font-family: Verdana, sans-serif;">Helen Keller once said.."<span style="background-color: rgba(255, 255, 255, 0);">The only thing worse than being blind is having sight but no vision" Therotically there can be something even worse and of course its "Neither sight not Vision". As far as bubbles are concerned i think Central Bankers are in that category. </span></span><br />
<span style="font-family: Verdana, sans-serif;"><span style="background-color: rgba(255, 255, 255, 0);"><br /></span>
<span style="background-color: rgba(255, 255, 255, 0);">They may be the best Scholars of their time. Highest marks in academic career. May have written big books that no one understand.. But bubbles which are infact unclaimed childs of Central Banking policies can never be seen by them ..Hence they can be safely placed in "Neither Sight Nor Vision" category atleast for Bubbles..</span></span><br />
<span style="font-family: Verdana, sans-serif;"><span style="background-color: rgba(255, 255, 255, 0);"><br /></span>
<span style="background-color: rgba(255, 255, 255, 0);">Last week India's central Bank Governor Subba Rao claimed that there is no Housing Bubble in India. Prices have surged up by 1000%. In few cities and the whole mania has exact bubble characteristics. But this dude don't See it... <i>He has no clue that When it bursts how sloppy his statement and how idiot he will look</i>. This may sound rude but it's my honest opinion and I guess I have full rights to express same.</span></span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
<span style="font-family: Verdana, sans-serif;"><a href="http://www.business-standard.com/article/economy-policy/subbarao-says-no-housing-bubble-building-up-113050600390_1.html">http://www.business-standard.com/article/economy-policy/subbarao-says-no-housing-bubble-building-up-113050600390_1.html</a> </span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
<span style="background-color: rgba(255, 255, 255, 0); font-family: Verdana, sans-serif;">Formally there has been a <b>proven track record of Bubble Blindness in Central Bankers</b> With Alan Greenspan And Ben Bernanke left with no option but to admit that they could not see it.. (Thanks to electronic Media that capture exactly what they said how they said)</span><br />
<span style="background-color: rgba(255, 255, 255, 0); font-family: Verdana, sans-serif;"><br /></span>
<span style="background-color: rgba(255, 255, 255, 0); font-family: Verdana, sans-serif;">Enjoy this .. </span><br />
<span style="font-family: Verdana, sans-serif;"><span style="background-color: rgba(255, 255, 255, 0);"><br /></span>
<span style="background-color: rgba(255, 255, 255, 0);"><br /></span></span></div>
<span style="font-family: Verdana, sans-serif;"><iframe allowfullscreen="" frameborder="0" height="315" src="http://www.youtube.com/embed/9QpD64GUoXw" width="420"></iframe>
</span><br />
<span style="font-family: Verdana, sans-serif;"><br /></span>
<span style="font-family: Verdana, sans-serif;">Thanks</span><br />
<span style="font-family: Verdana, sans-serif;">Author</span></div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-7123226793261705826.post-35325596510744780692012-12-22T11:47:00.000-06:002018-11-10T09:36:31.722-06:00China Japan War History.<div dir="ltr" style="text-align: left;" trbidi="on">
Sometimes actual history is far more interesting than some hypothetical future predictions.. I found same about this Chian vs Japan War History.<br />
<br />
</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-7123226793261705826.post-57643790948743565892012-12-21T12:34:00.002-06:002012-12-28T18:12:46.524-06:00How Real estate in India keep going up n how will it burst ...<div dir="ltr" style="text-align: left;" trbidi="on">
<br />
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;"><br />
Dear friends first of all apologies for not writing much over last few months.
With lots of work at workplace kind of lost rhythm on blog...anyways let’s get
into this mysterious topic.<o:p></o:p></span></div>
<u1:p></u1:p>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">First of all to See How it keeps
going up ... Let’s go to a bank in
Mumbai (earlier referred as Bombay) it’s a city with decade of escalating home
prizes.<o:p></o:p></span></div>
<u1:p></u1:p>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">Year 2009 Month ending January.
It’s a Friday afternoon.<o:p></o:p></span></div>
<u1:p></u1:p>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">Seth Nirmal Shah (Reputed ... Real estate developer) enters in Bank in
a bit worried face and talk to security “Tell Mr Joshi Nirmalbhai….here...”<o:p></o:p></span></div>
<u1:p></u1:p>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">Security calls the Branch
Manager. Branch Manager comes out and received Mr. Nirmal Shah to take him in
his office.<o:p></o:p></span></div>
<u1:p></u1:p>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;"> Mr. Joshi: “Please have a
seat sir. Will you take tea / coffee?”<o:p></o:p></span></div>
<u1:p></u1:p>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">Mr. Nirmal: “No thanks... I am
here to talk something bit serious... See the booking is happening but its bit
slower than expected after this America... news. I don’t think we will be able
to pay you loan this whole quarter. <o:p></o:p></span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;"><br />
Mr. Joshi: "What. ...."<o:p></o:p></span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;"><br />
Mr. Nirmal: “See Mr. Joshi...We have to file results in March. I can’t show
losses on book as it will create panic and no one will buy from my new
projects.”<o:p></o:p></span></div>
<u1:p></u1:p>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">Mr. Joshi: “Sir but last quarter
also you said same. I had taken special approval from corporate only for
you…with Promise that he will pay pending installments over next 6 months“<o:p></o:p></span></div>
<u1:p></u1:p>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">Mr. Nirmal: “I am very thankful
to you for that Mr. Joshi…. But I am serious I have not paid Labor contractor
yet this month. Sand and cement contractors don't even talk without cash at
least you help me.”<o:p></o:p></span></div>
<u1:p></u1:p>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">Mr. Joshi: “Sir Can I suggest you
one solution”<o:p></o:p></span></div>
<u1:p></u1:p>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">Mr. Nirmal: “Sure Sir Advice form
educated person like you is always welcome…”<o:p></o:p></span></div>
<u1:p></u1:p>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">Mr. Joshi: With bit enthusiasm
“See sir this is u know demand supply equation…. now that demand is low why
don’t you reduce price and sell of flats. Your Profit Margie is huge as
both of us know…that way u can clear all payments and I won’t have any issue to
approve loan for your next Project….”<o:p></o:p></span></div>
<u1:p></u1:p>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">Mr. Nirmal: “With cunning smile …
never even think like this Mr. Joshi … …"<o:p></o:p></span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;"><br />
Mr. Joshi: "But Why? It will benefit you, me and...Buyers also...”<o:p></o:p></span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;"><br />
Mr. Nirmal: "See Mr. Joshi ...
We have hiked rates just today slightly... to keep our Assets on our book
performing” and remember that's only way this business run. And that helpful to
you too…."<o:p></o:p></span></div>
<u1:p></u1:p>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">Mr. Joshi: “But how’s that Sir …I
just need my loan repaid...”<o:p></o:p></span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">Mr. Nirmal: “Mr. Joshi
remember... Half flats that are unsold is my asset. And remaining that are sold
is your bank’s asset for next 20 years. If we make rates down we both are in
trouble... as assets become Non Performing on your and mine book”<o:p></o:p></span></div>
<u1:p></u1:p>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">Mr. Joshi: "But ….for me ... I have to take hit on bad loans if not
bad assets...”<o:p></o:p></span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">Mr. Nirmal: “I know … remember my
friend ... no one buys home when prizes
start dropping... do u understand this ….. I don't sell flats I sell fear that
they won't be able to buy it tomorrow and for wealthy it's just an investment
...That's my business... anyways... Bottom line for you is if I
reduce price u will have bad assets and bad loans both…”<o:p></o:p></span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;"><br />
Mr. Joshi: " But sir for common man....when... hmm I think I get
you … but I can’t tell if corporate will approve to not have collection this
whole quarter”<o:p></o:p></span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">Mr. Nirmal: “That’s ok ….. But
let me know in 2 days….. And if you think it’s not feasible for you to
continue loaning us we will shift our loans to ICCCIIICC Bank. Their person
met us yesterday and he was talking about some new proposal of re-Structuring
loan. I told him I have relations with Mr. Joshi let me talk to him and get
back…”<o:p></o:p></span></div>
<u1:p></u1:p>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">Mr. Joshi: “No no.. sir don’t take
such drastic step whatever ICCCIIICC can give you we will give you all
that with .5 % less rate. We also have got a circular from Central Bank about
“1 time Restructuring of real estate Loan” we are waiting for corporate
communication for clarity on same” You are our big customer. After all we get
home owners loans also from you only<span class="apple-converted-space"> </span>J”.<o:p></o:p></span></div>
<u1:p></u1:p>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">After 2 Days:<o:p></o:p></span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">Monday Afternoon: Office of Mr.
Nirmal Shah.<o:p></o:p></span></div>
<u1:p></u1:p>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">Mr. Joshi comes to office with
smiling face …<o:p></o:p></span></div>
<u1:p></u1:p>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">Mr. Nirmal: “Good Afternoon
sir…………. any good news?”<o:p></o:p></span></div>
<u1:p></u1:p>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">Mr. Joshi: “Yes Sir came here to
give you great news ... as I told you
last week, we got a circular form Central bank for 1 time restructuring of real
estate debt for Developers it means u don’t have to pay anything for next many
months and after that we will reduce rate of interest by .5% only for u.” Also
if you promote out bank to your new customers we can think of additional .5%
reduction in interest sir!”<o:p></o:p></span></div>
<u1:p></u1:p>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">Mr. Nirmal: “That does great ... believe me it’s a game changer Mr Joshi!!
Bravo to Central bank and Finance Minister Chidambaram... after all he
is foreign educated... he understands pain of business… Cheers Mr. Joshi thanks
you so much!! ”<o:p></o:p></span></div>
<u1:p></u1:p>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">Mr. Nirmal : Pickup phone and
tell his “Sells Team Head “ “Tell all semiserious buyers that everything is
sold …and tell all serious buyers that there is only 1 flat left with 20%
higher price than what we discussed yesterday . There is no hurry for sale.” <o:p></o:p></span></div>
<u1:p></u1:p>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">Mr. Nirmal: "see Mr. Joshi...we are taking care of your Assets Quality they are performing like never
before. And there is no question of Bad loans as once market picks up we will
start getting “new Investors” and we will clear loan. !! Kudos to Government“.<o:p></o:p></span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;"><br /></span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;"><br /></span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">I believe that this “Imaginary”
discussion is what’s keeping real estate Running.!!!</span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;"><br /></span></div>
<u1:p></u1:p>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">But it reminds me an old story.<o:p></o:p></span></div>
<u1:p></u1:p>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in; text-indent: .5in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">Once upon
a time King Promises one greedy Person to give all Land that he can run across.
He put condition that if he stop, he loses 90% of it. And then of course man
keep running till he finally die vomiting blood…<o:p></o:p></span></div>
<u1:p></u1:p>
<div style="margin-bottom: .0001pt; margin: 0in; text-indent: .5in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">To me
today’s this “Performing Real estate” is like that man. Only difference is King’s
idea was to make him fail (May be he was not educated from Harvard). Today’s
King’s promise is to make him win.<o:p></o:p></span></div>
<u1:p></u1:p>
<div style="margin-bottom: .0001pt; margin: 0in; text-indent: .5in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in; text-indent: .5in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">So our
all the best to this running asset and it’s promoters.. They snoozed it's inevitable
collapse in 2009. Now it seems they are doing some “Changes” to keep it running
again for few years.. But I doubt if they can beat nature’s law that “something that
artificially goes up (Typical Bubble) burst one day”<o:p></o:p></span></div>
<u1:p></u1:p>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">Regarding how will it burst : Same
what we talked before .. Interest rates will become pin to this bubble 1 day. I
know many think rates will go down in 2013 and may be they will but in the end
they will blast this super bubble in dramatic way. As Interest rates will rise
eventually to levels world have never seen before..<o:p></o:p></span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: x-small;">Coming to why Harvard Educated P
Chidambaram doesn't understand it!! Well</span><span class="apple-converted-space" style="font-family: Arial, sans-serif; font-size: 10pt;"> </span><span style="font-family: Arial, sans-serif; font-size: x-small;">Fact
is whole bunch of Harvard / Top School educated Wall Street Professionals never
understood it before 2008 crisis. So why should he be only one to get it. I
mean these brilliant powerful people think they are beyond nature… Remember he is
same person who kept telling “Fundamentals are sound – Don’t panic” just before
market collapsed by 70% from it’s peak. From what I see he just doesn't get it
like many others…<o:p></o:p></span></div>
<u1:p></u1:p>
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<br /></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">P.S: Just to make it clear … I have
simply huge respect for Big Schools in world. It is my unfulfilled dream to be
grad from Top Schools in US. Recent contribution of these Big Schools to Free
education platform like <span class="apple-converted-space"> </span><a href="https://www.coursera.org/">https://www.coursera.org</a><span class="apple-converted-space"> </span>has increased my respect for these
schools even more.. (I recommend my Blog readers to explore same)<o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif; font-size: 10pt;"><br /></span></div>
<div style="margin-bottom: .0001pt; margin: 0in;">
<span style="font-family: Arial, sans-serif; font-size: 10pt;">But very honestly looking into
actions of their students, I don’t trust their economics department anymore.<o:p></o:p></span></div>
<u1:p></u1:p>
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<span style="font-family: Arial, sans-serif; font-size: 10pt;">Author</span></div>
</div>
Unknownnoreply@blogger.com242tag:blogger.com,1999:blog-7123226793261705826.post-43033492579992547272012-08-20T15:21:00.001-05:002012-08-20T15:21:17.514-05:00Greece Back to Basics.. !!<div dir="ltr" style="text-align: left;" trbidi="on">
<br />
<div style="background-color: white; clear: left; color: #333333; font-family: Arial, Helmet, Freesans, sans-serif; font-size: 1.077em; line-height: 18px; margin-bottom: 18px; padding: 0px; text-rendering: auto;">
"The Greek financial crisis is not all negative," he says.</div>
<div style="background-color: white; clear: left; color: #333333; font-family: Arial, Helmet, Freesans, sans-serif; font-size: 1.077em; line-height: 18px; margin-bottom: 18px; padding: 0px; text-rendering: auto;">
"It is providing a huge opportunity for people to see that the system they live in is not working, so they can begin looking for alternatives."</div>
<div style="background-color: white; clear: left; color: #333333; font-family: Arial, Helmet, Freesans, sans-serif; font-size: 1.077em; line-height: 18px; margin-bottom: 18px; padding: 0px; text-rendering: auto;">
Read more on ...</div>
<div style="background-color: white; clear: left; color: #333333; font-family: Arial, Helmet, Freesans, sans-serif; font-size: 1.077em; line-height: 18px; margin-bottom: 18px; padding: 0px; text-rendering: auto;">
<a href="http://www.bbc.co.uk/news/world-radio-and-tv-19289566">http://www.bbc.co.uk/news/world-radio-and-tv-19289566</a> </div>
<div style="background-color: white; clear: left; color: #333333; font-family: Arial, Helmet, Freesans, sans-serif; font-size: 1.077em; line-height: 18px; margin-bottom: 18px; padding: 0px; text-rendering: auto;">
Thanks</div>
<div style="background-color: white; clear: left; color: #333333; font-family: Arial, Helmet, Freesans, sans-serif; font-size: 1.077em; line-height: 18px; margin-bottom: 18px; padding: 0px; text-rendering: auto;">
Author.</div>
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<br /></div>
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Unknownnoreply@blogger.com2tag:blogger.com,1999:blog-7123226793261705826.post-17129236587160518682012-07-31T07:59:00.002-05:002012-07-31T07:59:42.067-05:00HSBC sets aside $2bn to cover fines - Is this what Banks were invented for ?<div dir="ltr" style="text-align: left;" trbidi="on">
Yesterday<br />
<br />
<a href="http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9437527/HSBC-chief-apologises-for-shameful-scandal.html">http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9437527/HSBC-chief-apologises-for-shameful-scandal.html</a><br />
<span style="background-color: white; color: #282828; font-family: arial, helvetica, sans-serif; font-size: 14px; line-height: 20px; text-align: -webkit-auto;"><br /></span><br />
<span style="background-color: white; color: #282828; font-family: arial, helvetica, sans-serif; font-size: 14px; line-height: 20px; text-align: -webkit-auto;">Says :</span><br />
<span style="background-color: white; color: #282828; font-family: arial, helvetica, sans-serif; font-size: 14px; line-height: 20px; text-align: -webkit-auto;"><br /></span><br />
<span style="background-color: white; color: #282828; font-family: arial, helvetica, sans-serif; font-size: 14px; line-height: 20px; text-align: -webkit-auto;">In total, Britain’s largest bank said it had set aside $2bn in the first half of the year to cover the cost of "<b>money laundering"</b> as well as compensating UK customers "<b>mis-sold payment protection insurance"</b> and <b>"interest rate swaps"</b>.</span><br />
<div>
<span style="background-color: white; color: #282828; font-family: arial, helvetica, sans-serif; font-size: 14px; line-height: 20px; text-align: -webkit-auto;"><br /></span><br />
<span style="background-color: white; text-align: -webkit-auto;"><span style="color: #282828; font-family: arial, helvetica, sans-serif;"><span style="font-size: 14px; line-height: 20px;">For a common man like me these 3 world are as alien as some other complex financial terms e.g. (</span></span></span><span style="background-color: white; text-align: justify;"><span style="color: #373737; font-family: arial;"><span style="font-size: 14px; line-height: 18px;">LEAPS Derivatives, </span></span></span><span style="font-size: 14px; line-height: 18px;"><span style="color: #373737; font-family: arial;">Exotic option, </span></span><span style="font-size: 14px; line-height: 18px;"><span style="color: #373737; font-family: arial;">Tangible Common Equity</span></span><span style="background-color: white;"><span style="color: #373737; font-family: arial;"><span style="font-size: 14px; line-height: 18px;"> </span></span></span><span style="background-color: white; color: #282828; font-family: arial, helvetica, sans-serif; font-size: 14px; line-height: 20px; text-align: -webkit-auto;">).</span></div>
<div>
<div style="text-align: left;">
<span style="background-color: white; color: #282828; font-family: arial, helvetica, sans-serif; font-size: 14px; line-height: 20px; text-align: -webkit-auto;"><br /></span></div>
<div style="text-align: left;">
<span style="background-color: white; color: #282828; font-family: arial, helvetica, sans-serif; font-size: 14px; line-height: 20px; text-align: -webkit-auto;">But one thing is pretty clear and that is NONE of these "Activities" are at the core definition of Bank as per me.</span></div>
</div>
<div>
<span style="background-color: white; text-align: -webkit-auto;"><span style="color: #282828; font-family: arial, helvetica, sans-serif;"><span style="font-size: 14px; line-height: 20px;"><br /></span></span></span></div>
<div>
<span style="background-color: white; text-align: -webkit-auto;"><span style="color: #282828; font-family: arial, helvetica, sans-serif;"><span style="font-size: 14px; line-height: 20px;"><u>Bank was invented to reduce risk for lender (saver) and provide credit to good Borrowers (Typically entrepreneurs)</u></span></span></span></div>
<div>
<span style="background-color: white; text-align: -webkit-auto;"><span style="color: #282828; font-family: arial, helvetica, sans-serif;"><span style="font-size: 14px; line-height: 20px;"><br /></span></span></span></div>
<div>
<span style="background-color: white; text-align: -webkit-auto;"><span style="color: #282828; font-family: arial, helvetica, sans-serif;"><span style="font-size: 14px; line-height: 20px;">None of these word sound close to this basic function of Bank.</span></span></span></div>
<div>
<span style="background-color: white; text-align: -webkit-auto;"><span style="color: #282828; font-family: arial, helvetica, sans-serif;"><span style="font-size: 14px; line-height: 20px;"><br /></span></span></span></div>
<div>
<span style="background-color: white; text-align: -webkit-auto;"><span style="color: #282828; font-family: arial, helvetica, sans-serif;"><span style="font-size: 14px; line-height: 20px;">u Deserve it HSBC !! Unfortunately those 2 billion which u are set aside are not your money by any chance.. they are of common people and when u give it to any governments common man will feel that their robbed money is given to Governments ...as always without asking them ....</span></span></span><br />
<span style="background-color: white; text-align: -webkit-auto;"><span style="color: #282828; font-family: arial, helvetica, sans-serif;"><span style="font-size: 14px; line-height: 20px;"><br /></span></span></span><br />
<span style="background-color: white; text-align: -webkit-auto;"><span style="color: #282828; font-family: arial, helvetica, sans-serif;"><span style="font-size: 14px; line-height: 20px;">Author.</span></span></span></div>
</div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-7123226793261705826.post-22868184292628923042012-07-24T19:52:00.002-05:002012-12-28T18:12:46.522-06:00Not During my Term<div dir="ltr" style="text-align: left;" trbidi="on">
In India Pranab Mukharjee has Managed the economy well "During his Term" :) I mean people are big time unhappy for inflation and have got impoverished but Pranab da was lucky to be able to quit before main event that is looming on India when Interest rates will spike sharply than ever before !!<br />
<br />
Lucky Pranab da !! enjoy life as President.. of India !! </div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-7123226793261705826.post-57323256328186168832011-11-19T07:50:00.011-06:002011-11-20T14:33:02.756-06:00Story of Indian Rupee in his Own words.<div dir="ltr" style="text-align: left;" trbidi="on"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"></span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">I was stopped by a beggar in India early this year for money. I gave him 1 rupee coin and continued walking. The bagger looked at the coin and returned back. I was surprised when heard, ‘If you want to help, give some more rupees else keep this one with you.’ I inaudibly gave him some more money and left .But, the incident triggered my thoughts. I used to get 10 paisa to buy a candy nearly 20 years back and now even a beggar is not ready to accept a rupee.</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><br />
</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">I came home worried for my one rupee coin. What happened to rupee? How it depreciated so much and why? Will it be able to gain the value back or vanish one day? I sat on the sofa looking sadly at my rupee coin. I woke up suddenly by hearing some noise. ‘Who is there’, I asked. “Hey, young man, here I am…! “ I amazingly looked at the rupee coin in my hand, “Is that you”??</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><br />
</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">“Yes, I am…! People know me as Indian Rupee…! I am the one having glorious past, doomed present and uncertain future. “</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><br />
</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">“Glorious Past?, I exclaimed. “Do you know meaning of my name? Rupee means Silver in sanskrit.”</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Rupee continued, “I am almost 175 years old now. I was born in 1835. East India Company created me to have a single currency across the country. I witnessed 1857 revolt, British Raj, Famine states, Indo Bhutan, Indo Afghan War and many more. I had family members like Damdi, kani, paraka, aana, beda, pavala, artharupee etc. Each one had its own purchasing power. My purchasing power was more than a today’s five hundred rupee note. If you don’t believe do some calculations and verify”</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><br />
</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">“Then how you depreciated?” I asked.</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><br />
</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">“That’s a long story.. Since inception my value was rock-solid for almost 40 years. I was like King. Then somewhere in 1875 silver prices dropped significantly worldwide in. Most of the Industrial Nations like Germany,US,Uk adopted Classic Gold Standard. Although, my intrinsic value (amount of silver content) remained same, relative value went down. I thought if my country was independent it would have also joined Industrial Revolution as well.</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><br />
</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">“Ok. It happened in 1875.But now silver value is high, then why you not appreciated?” I asked.</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><br />
</span><br />
<br />
<div class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">“True. Silver Price shot up in 1939 during World War II and British Raj devaluated me by almost half of my value. My silver content was reduced by 50%. British started making me of 50% silver, 40% copper, 5% nickel & zinc each. Real twist came in 1947 when British Raj removed silver content completely. Nickel made Coin was named as Rupee! However my sorrow vanished same year as my own country became independent. I was fully confident that my own country will bring my King Status back and thereby will become a developed nation.”<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">“Unfortunately, instead of getting appreciated, I got devaluated every decade against most other currencies. And because other currencies also depreciated against their original value, today even beggars are not ready to accept me. British Raj devaluated me by half in 110 years and my own people devaluated me around 1/250 times compared to my original value in hardly 60 years…!”<o:p></o:p></span></div><div class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">“Do you know what is responsible for this, Budget deficit (Spending more earnings and printing Notes for "Deficit Amount”), Trade Deficit (More Import than export), War expenditure, Balance of Payment problems (No Money to pay for Obligation). Bad Debt, Protectionism, lack of visionary leadership, asset bubbles & many more."<o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">"Today looking at anti-corruption movement I feel someone is at least having courage to fight against bad. But do you know why corruption is at first place? Nobody wants to be corrupt; they opt to be corrupt due to my fading future. It’s my uncertain or rather certainly diminishing value that leads to corruption. In fact people of your generation think that my lower value is better as they make more profit from outsourced jobs. I feel like value, self-esteem and confidence of my people is also de - valuated 250 times. Countries with weak currency never prosper. India would shine only if I my value is restored or appreciated considerably. “<o:p></o:p></span></div><div class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><br />
</span></div><div class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Rupee was silent and I felt ashamed. </span></div><div class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><br />
</span></div><div class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Below are eye opening facts that I found after some maths.<o:p></o:p></span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><br />
</span><br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgUO6pRq-CMwT5ljOzIyLfFKWglV1J__MMZS_mfY08IcO0C4ES8b7iilAqRX9TdmMXVkDbW1vDLhIBypm0trsGyDjJLd-V84mpwr65iLCFFejLjAx53aydbFfqdhm6idLTQ385FjBfH7vA/s1600/Indian+Rupee+Subdivisions.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><img border="0" height="133" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgUO6pRq-CMwT5ljOzIyLfFKWglV1J__MMZS_mfY08IcO0C4ES8b7iilAqRX9TdmMXVkDbW1vDLhIBypm0trsGyDjJLd-V84mpwr65iLCFFejLjAx53aydbFfqdhm6idLTQ385FjBfH7vA/s400/Indian+Rupee+Subdivisions.png" width="400" /></span></a></td></tr>
<tr><td class="tr-caption" style="font-size: 13px;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Indian Rupee Subdivisions.</span></td></tr>
</tbody></table></div><br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi4AAvJimtMgLRwunKP1-kzflEXALx7EhcLwxJWG2pcxWfNcb7i0eyXmpTDAirNgUZ081ag84bD_VFDcTPDv88pJOM0pLSVO8tPDdZnRkRGt9Lx496o8-GyLC3Msxi50F6lT1OhMYyPJFE/s1600/Historic+Indian+Rupee+Value+Graph.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><img border="0" height="640" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi4AAvJimtMgLRwunKP1-kzflEXALx7EhcLwxJWG2pcxWfNcb7i0eyXmpTDAirNgUZ081ag84bD_VFDcTPDv88pJOM0pLSVO8tPDdZnRkRGt9Lx496o8-GyLC3Msxi50F6lT1OhMYyPJFE/s640/Historic+Indian+Rupee+Value+Graph.png" width="345" /></span></a></td></tr>
<tr><td class="tr-caption" style="font-size: 13px;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">INR vs Original value, INR vs USD, Value loss in USD terms.</span><br />
<div><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><br />
</span></div></td></tr>
</tbody></table><br />
<br />
<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhsXbYe1dR8Q8z_0QlkQeNruJUK6HQTZ61jZe08lhWw7282F3cTnnw4FqrTINB47BCYDDmgdt6jJYnEebCkibSov5ZEE8rOcW-pXdy78qmcE58jybjOer4ADi9ypN_gXbwHf-xs71laJfY/s1600/Historical+Indian+Rupee+Chart.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><img border="0" height="345" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhsXbYe1dR8Q8z_0QlkQeNruJUK6HQTZ61jZe08lhWw7282F3cTnnw4FqrTINB47BCYDDmgdt6jJYnEebCkibSov5ZEE8rOcW-pXdy78qmcE58jybjOer4ADi9ypN_gXbwHf-xs71laJfY/s400/Historical+Indian+Rupee+Chart.png" width="400" /></span></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Comparison of INR with it's Original Value, Value against USD and depreciation against USD.</span></td></tr>
</tbody></table><div style="text-align: center;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"></span></div><div style="text-align: left;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><br />
</span></span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">“In the End, we will remember not the words of our enemies, but the silence of our friends.”...............</span><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Martin Luther King Jr.</span></span></div><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><br />
</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Ref URL: </span><br />
<a href="http://www.coinnetwork.com/profiles/blogs/metamorphosis-of-1-rupee-coins?xg_source=activity"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">http://www.coinnetwork.com/profiles/blogs/metamorphosis-of-1-rupee-coins?xg_source=activity</span></a><br />
<a href="http://en.wikipedia.org/wiki/History_of_the_rupee"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">http://en.wikipedia.org/wiki/History_of_the_rupee</span></a><br />
<a href="http://en.wikipedia.org/wiki/British_Raj"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">http://en.wikipedia.org/wiki/British_Raj</span></a><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Special thanks to my wife for reviewing and editing.</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><br />
</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">comments</span><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"> thought welcome.. </span></div>Unknownnoreply@blogger.com13tag:blogger.com,1999:blog-7123226793261705826.post-65551048242079832682011-10-16T20:56:00.007-05:002011-11-17T18:54:39.451-06:00Why is Alexander The Great's Greece "not allowed to Default"<div dir="ltr" style="text-align: left;" trbidi="on"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"> Before Entering to topic of why "not allowed to default" let's touch base on why it is defaulting. In one sentence answer is "There is no Alexander the great left in Greece". Countries who have trade / budget deficit, have been going bankrupt for a while. India went bankrupt in 1991. Indian Rupee was devaluated.Russia went bankrupt in 1998. This is no new thing. Over the time great nations adjust themselves and again thrive form it.</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"> Now is "Greece too big to fail"? Looking into numbers, GDP of Greece $318.1 billion (2010 est.) </span>is smaller than revenue of Exxon Mobil US$ 383.221 billion (2010) That does not mean it's small number but if you look at world GDP 74.54 Trillion it's hardly 0.4 % of it so it does not sound like too big to fail. Then why there is so much hue and cry on Greece. </span><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">I think there are multiple reasons behind this complex issue. </span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><br />
</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"># First of all Greece is not issuing it's own currency ECB (European Central bank) issues it. Hence the standard solution of de-valuating currency and get rid of debt won't work. (One that India and Russia Used during their balance of payment issue)</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"># Secondly Greece is just tip of an iceberg. What happens with Greece may happen with all (PIIGS) Portugal, Ireland, Italy, Spain and even Finland. If they all default, the viability of Euro as Single currency will almost come to an end.</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"># Therefore Germany the main force behind Euro is not allowing any sudden default / uncontrolled action from anyone.</span><br />
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKr2XzaCEperYRH8KsfDC0QkyAYpUAEXq_G4f0OjgHUmYR8IxFqllM99mA71v8LckDcymoGmsLUlxG0TKb47nRECTz08Egg9jfgTg1G-1ZVqBCeNGjywjGxR2EZp6kQk2_CmN4yH17_I8/s1600/Greece+Iceburg.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="308" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiKr2XzaCEperYRH8KsfDC0QkyAYpUAEXq_G4f0OjgHUmYR8IxFqllM99mA71v8LckDcymoGmsLUlxG0TKb47nRECTz08Egg9jfgTg1G-1ZVqBCeNGjywjGxR2EZp6kQk2_CmN4yH17_I8/s400/Greece+Iceburg.png" width="400" /></a></td></tr>
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<tr><td class="tr-caption" style="font-size: 13px; text-align: center;">European Debt Crisis</td></tr>
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</tbody></table><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">On the top of all this the very less discussed but very very crucial reason behind "not allowing" must be CDS (Credit Default Swap). This is how CDS work..</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">1) Let's say Deutsche Bank buy 10 Yr bonds form Greece government or any corporate. In order to "mitigate Risk of bond default" they also buy CDS (kind of Insurance) form other bank. Say JPMC; based on risk involved in Bond JPMC charges "CDS fee" to Deutsche Bank.</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">2) If Greece pay back as agreed; JPMC gets fees and Deutsche Bank get principal and interest form Greece Government.</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">3) If Greece can not pay. Deutsche bank claim all their losses to JPMC and JPMC has to pay to Deutsche Bank. </span><br />
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</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Now understanding credit default swaps, let's imagine on one fine day PIIGS and Finland default. Immediately creditors like Deutsche Bank / BNP Paribas will run to their CDS issuers (Who knows who they are but surely they are form Financial Big Bank community). We all know how healthy our banks are. Hence we will surely end up in situation where PIIGS country and "CDS issuer" both default. This Situation is called as "Double Default".</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">So summing up we are in situation where if We put governments as one community and Big Banks as other community. Big Banks are both Creditor and Insurance Provider to Governments. In this game with 1 default of country One bank will fail as CDS issuer and other as creditor (All 3 party lose). Remember in 2008 we learned that "Big Banks can not be allowed to fail" and that's exactly reason why "Greece is not allowed to fail" </span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">How long this "Not allowed" will be tolerated by Germany and other solvent nations is a million dollar question whose answer is tough. Irony of story again is money that government has is of common man's tax money and money that bank has is common man's saving. so in both cases common man is to lose either way. </span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Comments / thoughts welcome.. </span><br />
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<i><span class="Apple-style-span" style="font-family: 'Courier New', Courier, monospace; font-size: x-small;">P.S. : Ref : <a href="http://www2.isda.org/">http://www2.isda.org/</a> </span></i><br />
<i><span class="Apple-style-span" style="font-family: 'Courier New', Courier, monospace; font-size: x-small;">" The market size for Credit Default Swaps more than doubled in size each year from $3.7 trillion in 2003. By the end of 2007, the CDS market had a notional value of $62.2 trillion. But notional amount fell during 2008 as a result of dealer "portfolio compression" efforts (replacing offsetting redundant contracts), and by the end of 2008 notional amount outstanding had fallen 38 percent to $38.6 trillion" </span></i></div>Unknownnoreply@blogger.com19tag:blogger.com,1999:blog-7123226793261705826.post-77770212344372584552011-07-29T16:50:00.000-05:002011-09-08T09:15:26.615-05:00Can US Default on it's Debt. ??<div dir="ltr" style="text-align: left;" trbidi="on">
No way ..are you kidding..?? In Paper currency it can never happen unless you do not control your paper currency. e.g. in case of PIIGS Portugal, Italy, Ireland, Greece and Spain currency is printed by ECB (European Central Bank) and hence technically they can default. No other country that control it's own currency can default in today's world.<br />
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However in long term if Hyperinflation becomes reality then probably countries have to default as they won't be able to do both i.e.<br />
# Money supply shrinking via increasing interest rate.<br />
#Increased payment on Interest.<br />
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but that's still 5 - 10 years away till then let's enjoy ..</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-7123226793261705826.post-78811954194548406832011-07-15T03:39:00.000-05:002011-09-08T09:15:42.515-05:00Joseph Stiglitz - Problems with GDP as an Economic Barometer<div dir="ltr" style="text-align: left;" trbidi="on">
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">While we all measure "success of country in GDP growth",Truth about GDP number is very nicely explained here by Nobel Prize Winning Economist Joseph Stiglitz. After hearing this and similar comment by Peter Schiff in which he said if you have Hurricane Katrina, GDP Grows :) To me now "GDP" sounds like "economic chaos" done by country in year. It's nothing to do with productivity of nation / real growth of people's quality of life. Basically it's nothing to be proud about for any nation.</span><br />
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Unknownnoreply@blogger.com2tag:blogger.com,1999:blog-7123226793261705826.post-77534624822796758312011-07-13T01:17:00.000-05:002011-09-08T09:15:52.098-05:00Is Ben Bernanke's position at Risk?<div dir="ltr" style="text-align: left;" trbidi="on">
After a very long time Ben Bernanke did both true and right statement. In his previous press conference he made it clear that "Fed has done enough. Fed will complete our existing Program (QEII) and there won't be any stimulus further." His clear remarks have made no dent in commodities in fact they have gone up! So Ben's troubles are increasing. Since he has agreed that he has no tools anymore. Probably he has put himself at risk of losing his Position. Another Possibility is Euro Zone mess can become scapegoat for all problems and his position may persist but in my opinion his position is at risk for Sure !!</div>
Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-7123226793261705826.post-81733718451496024652011-07-05T00:58:00.000-05:002011-10-19T09:46:05.297-05:00Question to RBI (Indian Central bank)<div dir="ltr" style="text-align: left;" trbidi="on">
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Since there is a right of Information act in India I hope I have full right to ask this question.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Currently India is fighting between 2 tough choices i.e. inflation vs growth. And everyone knows RBI has given more weight to growth than inflation.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><b>Now my question is, who gave this right to RBI i.e. to decide "for growth of some sectors of economy, everyone must pay more for food, cloths and in fact everything" ?? I think it's a huge decision taken on behalf of everyone without asking anyone</b>............. </span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">India's Inflation and RBI's response is very symbolic as in Post Stimulus world, India is first country to have 16% Inflation in Feb - Mar 2010. And so far has failed 9 times to curb that inflation. ....</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Sadly enough key decision makes are ready to ignore reality that "Nearly 80 percent of India lives less than dollar (50 Rs) a day and persistent inflation mean probably less food to eat than required". They still think that saving "Realty" sector is more important than this Reality...</span></div>
Unknownnoreply@blogger.com2tag:blogger.com,1999:blog-7123226793261705826.post-12217778848981123292011-06-07T21:58:00.000-05:002011-09-08T09:16:31.521-05:00The 2nd Biggest Government Help ever?<div dir="ltr" style="text-align: left;" trbidi="on">
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">No Government and politician intent to do bad for their country. </span><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">In our "Modern Society" we expect help from Governments in anything and everything... and hence they </span><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">do their best to please us and of course to remain popular. They talk very positive, take initiatives to help people. </span><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Here is the case study of one such "Big Initiative" from government that's not the biggest but perhaps 2nd biggest help ever.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Back in 2002, redefining American Dream, Then President George Bush declared an initiative that will help Americans become Homeowner. He bought Real Estate Industry, Mortgage Lender, Insurance Companies together and very openly encouraged home ownership.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">1) He removed down payment "barrier" by "American dream down payment fund". </span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">2) Provided Tax Credit for single family home for 1st time buyer.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">3) Simplified process that had complex "rules and regulations".</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">4) Made it feasible for people with poor credit rating to buy home.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">He called it America's Home ownership challenge<b> </b></span><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">and Funded this help by hefty 440 Billion USD. <b>In 2002 </b></span><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><b>Goal was to make 5.5 Million People Homeowner. </b>Here it is in his own words.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">It was a great initiative it became key catalyst for Major economic boom form 2002 - 2007. </span><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Most importantly it helped driving home ownership as well. <u>If you see in graph below</u>, Home ownership grew by almost 1.5 % ~ 4.6 Million which was in direction to Target President had set i.e. 5.5 Million that too in matter of 2 years.</span></div>
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEilIadzw5ki97l-FCo0-wTihJqRtQMhuzpMpJCBfDmt-V34PQJtEuI9CX09do5wxRP5pCd9AOmBpfa1fsVPdii2CgTKjfm-s3ZunVXeNYSnrLj2KoA7-rj9-HBccXHw1H9gB0zutfNh60g/s1600/20110531_HOUSING_graphic-popup.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEilIadzw5ki97l-FCo0-wTihJqRtQMhuzpMpJCBfDmt-V34PQJtEuI9CX09do5wxRP5pCd9AOmBpfa1fsVPdii2CgTKjfm-s3ZunVXeNYSnrLj2KoA7-rj9-HBccXHw1H9gB0zutfNh60g/s400/20110531_HOUSING_graphic-popup.jpg" width="366" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">US Housing Graph Home ownership back at 1998 Level and continues...</td></tr>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Now, everyone know it didn't last long......... and how it became the "root cause" of 2008 Economic collapse, Lehman Brother, AIG episode, etc..etc....etc..........</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Irony of the story however is despite creating "new 5.5 Million" Homeowners, <b>this "help" resulted in "total 8.6 Million" people to lose homes..to make it worse 4 Million people had homes in 2002 before this speech and initiative. . </b></span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">On a different thought.. probably Government had a chance to increase home ownership by considerable percentage if they would have allowed real estate balloon to freely burst. It would have been an economic catastrophe however once it would have reached bottom, home prices would have reached so dirt cheap level that probably everyone would have been homeowner without much debt at all. </span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Anyways.. before closing I think let's speak about biggest help ever. While Bush's help started with 450 Billion USD in 2002. this started with 1 Trillion in 2008 and has already reached 2 Trillion (officially). Some argue that it's actually 9 Trillion. For common man like me both figures are beyond comprehension. But it's definitely much higher than 2002 help. So let's see what results we get down the road of this "help". Let's hope it goes right this time; as that's what we will like to hope in 2011.</span></div>
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Unknownnoreply@blogger.com3tag:blogger.com,1999:blog-7123226793261705826.post-82618762677795434872011-06-06T00:50:00.000-05:002011-09-08T09:17:09.607-05:00Significant economic events 2011<div dir="ltr" style="text-align: left;" trbidi="on">
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">It was a simply crazy time since 2011 started. Huge workload at workplace and can clearly "feel" increase in business activity. Not sure if we all are getting same feel but at least I felt so. Lots of things were happening in parallel that could have been written about..... anyways just trying to write about key news and happenings that have "significance" long term impact..</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><b>Product of Past</b></span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">In Jan 2011 visit Hu Jintao called current dollar based system as “Product of the Past”. This was a very significant statement. He even did not bothered to say it's today's system while fact is it is. USD is a very crucial factor to macroeconomic stability.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><b>The Revolution.</b></span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">In a very very significant series of events in Middle east, "Common Man" shown his strength in unthinkable series of events. We have been discussing about civil unrest, revolutions for a while in this blog. Although I anticipated this as aftermath of inflationary era in which we are now in; for some countries probably it was already </span><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">enough to revolt against powers.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><b>Towards Country net?</b></span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">One of the key catalyst to middle east revolution was Internet, Social networking tools and Blogging. It was so crucial that at one stage in Egypt they actually closed Internet. As aftermath of all this I suspect more and more monitoring of internet and restrictions that may not keep internet as Open Society any more.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><b>Japan in Distress</b></span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Japan's earthquake and followed nuclear disaster was another shock to world. We saw in front of our eyes how fragile life is..</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><b>Dr. Ben Bernanke thinking good Name for QE3 ?</b></span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Dr. Ben Bernanke Chairman of Fed is in bit trouble. So far Fed was able to pass QE1 QE2. In simple terms Money supply increase by 1.8 Trillion as can be seen on <a href="http://research.stlouisfed.org/fred2/series/BASE">Graph Here</a> Before Housing crisis Money Supply was ~800 Billion USD i.e. from (1913 - 2008) and it became ~ 2 Trillion post QE I and 2.6 post QE 3.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">In 2002 Dr Bernanke Said.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="line-height: 19px;"><i>"The U.S. government has a technology, called a printing press, that allows it to produce as many dollars as it wishes at essentially no cost." "Under a paper-money system, a determined government can always generate higher spending and, hence, positive inflation."</i></span></span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Following his Philosophy he increased Money supply like this (Printing money and buying Houses, Student Loans, and what not). Now despite expanding money supply by this much %, Data is talking about Double Dip and QE2 is about to be completed in June 2011. So Dr. Bernanke (Who I think represent our generation ) must be thinking of finding good terminology for QE3.He will face more criticism for QE3 than QE 2, but when I read above statement I have no doubt he will do it. However it may be interesting to see what name he gives to this additional Money Printing.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">In General I think year started well with very high economic activity. On Negative side there were revolutions, natural disasters, Now economy is cooling a bit (Although Revolutions are still on in Middle East)</span></div>
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Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-7123226793261705826.post-81345656931907012052010-12-30T21:53:00.002-06:002011-11-17T18:56:18.611-06:00Although Double Dip Recession is Expected and Numbers Justify it, I still don't believe in it.<div dir="ltr" style="text-align: left;" trbidi="on"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Yesterday's Housing report sent shock wave in economists in US and there are more and more people saying about Double Dip Recession. Graph Below clearly shows direction towards south in Home Prices.</span><br />
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiz-7GevLbRux_zXE3rWKcWlQDiUIqfmciDmmGjLarYd9VrGxId5gBtzKiTvIwZ4cYaIO5y5X5zAnQ0zPJtxKeOW7ix95x257v17eKPpK5lrFOtd-UWZ7UbR3sypwB8DfZIJ285IxBVWvM/s1600/us-housing-prices-graph+%25281%2529.gif" imageanchor="1" style="margin-left: auto; margin-right: auto;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><img border="0" height="265" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiz-7GevLbRux_zXE3rWKcWlQDiUIqfmciDmmGjLarYd9VrGxId5gBtzKiTvIwZ4cYaIO5y5X5zAnQ0zPJtxKeOW7ix95x257v17eKPpK5lrFOtd-UWZ7UbR3sypwB8DfZIJ285IxBVWvM/s400/us-housing-prices-graph+%25281%2529.gif" width="400" /></span></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span class="Apple-style-span" style="font-size: x-small;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">US Housing Price Graph in % Change. Ref : <a href="http://foreclosurenv.wordpress.com/2010/12/01/united-states-housing-prices-still-crashing/">http://foreclosurenv.wordpress.com/2010/12/01/united-states-housing-prices-still-crashing/</a></span></span></td></tr>
</tbody></table><div><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><a href="http://foreclosurenv.wordpress.com/2010/12/01/united-states-housing-prices-still-crashing/"></a></span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">In India, Graph Below shows Interest Rates rising again towards "Previous Crash" level. So definitely it's another number supporting recession.</span><br />
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<table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh3x2-ZuqKz6yNpLw8Jfy7iW-E13CsEBAZx6NL0NO-UCbbBqRgKJIHBduA9841c1CeyO_E-Pvsu5VDzcZNgmMXx2GpnPviBk04AF6iT6xajOpWqEThCh_8E2Ls_cssQJtrGuVyO7JT2nbo/s1600/Interest+Rates+India.PNG" imageanchor="1" style="margin-left: auto; margin-right: auto;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><img border="0" height="157" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh3x2-ZuqKz6yNpLw8Jfy7iW-E13CsEBAZx6NL0NO-UCbbBqRgKJIHBduA9841c1CeyO_E-Pvsu5VDzcZNgmMXx2GpnPviBk04AF6iT6xajOpWqEThCh_8E2Ls_cssQJtrGuVyO7JT2nbo/s400/Interest+Rates+India.PNG" width="400" /></span></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span class="Apple-style-span" style="font-size: x-small;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">India Interest Rates Chart</span></span></td></tr>
</tbody></table><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">In China, Interest Rates have started going towards North, and there are reports of Real Estate crash already.</span><br />
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<tr><td style="text-align: center;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><img border="0" height="177" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhAPhB1tKXyXl_T7uQlgyqVWN1Zxxw-EOCXunM-HS-1OC3zTcIx-hIJ2zmt5yz_TIOn58JZ2XiszATQ8DqtP2H4ZhjcONNTCC_mgD0YYv_3ZVPkjK_kQV3DaN8709Dk9OgrVW43ZY-sYJc/s400/China+Interest+Rate.PNG" style="margin-left: auto; margin-right: auto;" width="400" /></span></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span class="Apple-style-span" style="font-size: x-small;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">China Interest Rate Chart.</span></span></td></tr>
</tbody></table><div class="separator" style="clear: both; text-align: center;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhAPhB1tKXyXl_T7uQlgyqVWN1Zxxw-EOCXunM-HS-1OC3zTcIx-hIJ2zmt5yz_TIOn58JZ2XiszATQ8DqtP2H4ZhjcONNTCC_mgD0YYv_3ZVPkjK_kQV3DaN8709Dk9OgrVW43ZY-sYJc/s1600/China+Interest+Rate.PNG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"></a></span></div><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">With all these Data many are already concluding that we are entering in Phase 5, 6, 7 of <a href="http://amareshgangal.blogspot.com/2010/10/feds-next-stimulus-and-what-it-mean-for.html">economic cycle</a> and Hence Recession !!! </span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">However I don't believe that Recession is underway because in western world despite Stimulus, Inflation level has not been out of hand. This will give a clear license to Central Banks to have another Rounds of Quantitative Easing / have more easing under current QEII or Simply Allow banks to lend freely. In emerging markets there may not be Stimulate. And they may raise interest rates in "baby steps", Carry Trade (i.e. borrowing money from places where interest rate is low, and investing in other country) will keep liquidity high.</span><br />
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<b><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">In 2011 / 2012 time frame I think governments across world will be busy in stimulating economies further and convince people by steps like..</span></b><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">1) Raising Minimum wage.</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">2) Encouraging Employers for Higher wages to counter higher living prices.</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">3) Never increasing Interest rates aggressively enough to allow bubbles blast.</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">4) Ask people to compromise on "Prices vs Unemployment".</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">5) Redefine Comfort Level of Price Index .. e.g 2 is considered as OK in US they will say let's have 5 as OK. in India 5.5 is considered as "Comfortable Level" They may say Let's have 8 as Comfortable level.</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">6) Asking banks to resume lending activity more generously to help economy grow again.</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">7) Keep on telling people that as prices are increasing, so will your wages and everything will be normal.</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">8) Keep on telling people that it's temporary and everything will be fine soon. </span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">9) At some stage when inflation goes beyond control they will introduce "Price Control" i.e. to restrict food / essential commodities at government control prices.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Concluding central banks and Governments will </span><b style="font-family: Arial, Helvetica, sans-serif;">Prevent Double Dip. Instead by resuming Lending, they can give very good results in short to mid term of course for Wall Street !! .</b><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">It will be however very interesting to see how countries like Germany / Singapore react to all this. There is a very good chance that they may opt for entirely different path towards austerity.</span><br />
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</span></div></div>Unknownnoreply@blogger.com7tag:blogger.com,1999:blog-7123226793261705826.post-63024046477947933272010-12-24T12:45:00.000-06:002011-09-08T09:17:32.179-05:00The Ball is in China’s Court. Part 1<div dir="ltr" style="text-align: left;" trbidi="on">
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Last month I was in my home place in India. While traveling, an article in Times of India (leading Indian News Paper) caught my attention. Article was about CBSE Board (One of the Key Educational System) introducing Chinese Language (Mandarin) in Schools. In article it was clearly mentioned that looking into growing economic importance of China, Mr. Vineet Joshi Chairman of the board has decided to introduce Mandarin in schools.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">I was happy to read that article. Breaking the barriers of conventional way of education i.e. Local Language + Hindi (India’s National Language) + English, CBSE board decided to go for Mandarin. Obviously China's growth story deserves this attention. Recently China developed a train that can run at 262 Miles per hours (Fastest in World). It's developing Aircrafts now, There are huge number of patents by Chinese Scientists. So it’s not just low cost manufacturing anymore and there is a lot that china has achieved over years. Clearly we are today in a world where everyone is ready to accept China in its new role of economic superpower (Willingly or unwillingly). <o:p></o:p>Map Below tells us why.</span></div>
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgaAoPieDqiEfp-6duOCWsZ1jz61F1qcef2sAi8-3meQi1UIDX3SsQZzJ6eVrOlaIvUoAznEuLsT3MPCh0ww6NgE_LNLq7xBAwcfju8VKMCMqVtg5m0z9QdriuTJ65T2mt1BT8bimltVnM/s1600/Country_foreign_exchange_reserves_minus_external_debt.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="181" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgaAoPieDqiEfp-6duOCWsZ1jz61F1qcef2sAi8-3meQi1UIDX3SsQZzJ6eVrOlaIvUoAznEuLsT3MPCh0ww6NgE_LNLq7xBAwcfju8VKMCMqVtg5m0z9QdriuTJ65T2mt1BT8bimltVnM/s400/Country_foreign_exchange_reserves_minus_external_debt.png" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span class="Apple-style-span" style="font-family: sans-serif; line-height: 15px;"><span class="Apple-style-span" style="font-size: small;">Map of countries by foreign currency reserves and gold minus external debt based on 2009 data from CIA Factbook</span></span></td></tr>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">While having all these thoughts in mind I turned some pages of Newspaper and found one more article on China. I don’t remember title exactly but it was related to “Attitude Issues of China with its neighbors”. It was clearly mentioning unhappiness of China’s neighbors e.g. India, Japan, S Korea. In recent incidence of arrest of marine Japan found itself in kind of secondary position. (Historically Japan has upper hand in Wars with China and obviously knowing Japan they won’t forget such insults easily) China has issue with India over Arunachal Pradesh, Stapled Visa for Kashmir residents, and hence is not considered partner of trust by Indians (No matter how many times Wen Jiabao visit to Delhi and whatever he says). All this bad “body language” clearly brings clouds of suspicion on China’s position as economic superpower. As George Soros rightly said, China must understand the advantages and responsibilities that come along with Leadership position, looks like probably they still don’t understand it.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Crash of 2008 has brought turning point in the story of China. Awkward position on reserves may also be a key source of frustration on their side, which fumes out on neighbors as they can’t say /do much to US. But they must understand that <b>winner especially new winner has many enemies and one mistake can turn success story into catastrophe.</b><o:p></o:p></span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">In short I think ball is in China’s Court. By building environment of trust and harmony with its Asian counterparts China can make 21st Century truly as “Century of Asia”. Else if they are not able to cope up with pressure / continue with attitude issues, their mistakes even can convert Asia into the battlefield of Major WAR. (May be WW III)</span></div>
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Unknownnoreply@blogger.com6tag:blogger.com,1999:blog-7123226793261705826.post-25100472540682365422010-11-18T20:48:00.001-06:002011-10-29T15:54:26.623-05:00Impact of Paper Currency on Equity Market, Income Inequality, Marriage rate, Divorce rate, Health....<div dir="ltr" style="text-align: left;" trbidi="on"><div class="MsoNormal"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">By now I believe regular readers of our blog know that we have a Big time problem with "Paper currency system" that started on 15th Aug 1971.</span><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">(Recently, writing in the Financial Times, World Bank President Robert Zoellick called for a new monetary system to replace the floating rates adopted in 1971 known as Bretton Woods II.). So there is a thought process coming in mainstream that agree on flaws of paper currency. </span><br />
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<span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"></span><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">In this article I have tried to see "Before 70s" vs " After 70s" pattern for many aspects. </span><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">Although I don't like to use maths and stats in sensitive issues such as Marriage rate, Divorce Rate or even on Health, </span><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">few graphs below were too shocking for me. So I just thought of sharing with our friends.</span><br />
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<tr><td style="text-align: center;"><img border="0" height="200" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEie404HYRV_lr2OIA66uCL1aTlmsBuUEi2w5szeDJCWOKBRKS8OCFwDj2n169Fotxdykb7rA6UurHQgrLwYbQ22TlcqFzppbv0bIc5W0X-IxeGkl_owcrd8e44NXg7cHcKhEdZc7QQrbCg/s400/Dow+Impact.PNG" style="margin-left: auto; margin-right: auto;" width="400" /></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Historic Dow Jones Before and after Paper currency</td></tr>
</tbody></table><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEie404HYRV_lr2OIA66uCL1aTlmsBuUEi2w5szeDJCWOKBRKS8OCFwDj2n169Fotxdykb7rA6UurHQgrLwYbQ22TlcqFzppbv0bIc5W0X-IxeGkl_owcrd8e44NXg7cHcKhEdZc7QQrbCg/s1600/Dow+Impact.PNG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"></span></a></div><div class="MsoNormal" style="text-align: center;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><br />
</span></div><div class="MsoNormal" style="text-align: left;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">As we all know Dow Jones Industrial Index is one of the TOP Indicator of equity health of US and in turn whole world, We can clearly see "Before 70s" vs " After 70s" pattern here.</span></div><div class="MsoNormal"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><br />
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<tr><td style="text-align: center;"><img border="0" height="298" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEibVcen_93WYIYXEcKNM9JxcDkCW3o7iRpsTsnv9RihSx8EBf6ujKvqToldDY3VduMp4pSSYHerIR0pf5yQXbvOJvxbo4_s7KP5w4FVo_UacU5kv1LObTQ8WV8AdgpnhP50dvPXiC4z1aM/s400/gini.gif" style="margin-left: auto; margin-right: auto;" width="400" /></td></tr>
<tr><td class="tr-caption" style="text-align: center;">widening income Inequality </td></tr>
</tbody></table><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEibVcen_93WYIYXEcKNM9JxcDkCW3o7iRpsTsnv9RihSx8EBf6ujKvqToldDY3VduMp4pSSYHerIR0pf5yQXbvOJvxbo4_s7KP5w4FVo_UacU5kv1LObTQ8WV8AdgpnhP50dvPXiC4z1aM/s1600/gini.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"></span></a></div><div class="separator" style="clear: both; text-align: center;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><br />
</span></div><div class="separator" style="clear: both; text-align: left;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">This is pretty interesting one. (Income inequality has Increased in Paper currencies ). There is </span><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">"Before 70s" vs " After 70s" pattern here. </span><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">What might be reason ? Is that the previous Graph ? are people investing in Stocks (By understanding / not understanding magic of paper currencies) becoming richer? Leaving rest all poor in comparison? Is equity Investment only best way to make money in paper currencies?</span></div><div class="separator" style="clear: both; text-align: left;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><br />
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<tr><td style="text-align: center;"><img border="0" height="300" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiF6OuTsT3QsGTM-vx7_vWb0LXxD-4mug2JqeDMCmrIcngRTkxsXs0D3EfoOkjEsAmqMQPJj7Qf9yeWgQ05Rdp9RG1jKYq9WxD2_bdoNyZKJS0ehJ_qssnnS2uzPzZYBQapvtau624Y4x4/s400/earnsex.gif" style="margin-left: auto; margin-right: auto;" width="400" /></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Median Annual Earnings over decades.</td></tr>
</tbody></table><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiF6OuTsT3QsGTM-vx7_vWb0LXxD-4mug2JqeDMCmrIcngRTkxsXs0D3EfoOkjEsAmqMQPJj7Qf9yeWgQ05Rdp9RG1jKYq9WxD2_bdoNyZKJS0ehJ_qssnnS2uzPzZYBQapvtau624Y4x4/s1600/earnsex.gif" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"></span></a></div><div class="separator" style="clear: both; text-align: center;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><br />
</span></div><div class="separator" style="clear: both; text-align: left;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">Here there is co-relation for Men's income. It remains in same bracket while women's income growing steadily. This should make us proud as a human race that women's are bridging the gap of income. Although for Woman's graph increasing trend is from mid 50s and has gone up steadily so there seems no pre 70 and post 70s correlation.</span></div><table align="center" cellpadding="0" cellspacing="0" class="tr-caption-container" style="margin-left: auto; margin-right: auto; text-align: center;"><tbody>
<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgWwkdgDRqjKyoVsRIjIfBPnqSkYPbjHID1VEpROjHYj8c8yGW-ZV5avb4ynxKMKwIwCUUOW0oo-XgT2ZYHVJHZcoATb_uFcH63d4kKYsE8QccZA_SJh4gy2QKJuTI7D2e_v8Cs5-0v2XI/s1600/divorce.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="300" ox="true" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgWwkdgDRqjKyoVsRIjIfBPnqSkYPbjHID1VEpROjHYj8c8yGW-ZV5avb4ynxKMKwIwCUUOW0oo-XgT2ZYHVJHZcoATb_uFcH63d4kKYsE8QccZA_SJh4gy2QKJuTI7D2e_v8Cs5-0v2XI/s400/divorce.jpg" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Divorce Rate over decades.</td></tr>
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</span></div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhcsb-4UyTRYlvQ_dke5aQRK8L7pPqlpjoqU5jpbgNZXeZ0t7hFNWuFmI6KgXYWKG08QnerJocgkVLpa6ewgoBF9BNmQTXKV-QgKgsNTdSDP17-r5jRqk-d7PwXPtElkrmKo7kivG2RKZk/s1600/divorce.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"></span></a></div><div class="separator" style="clear: both; text-align: left;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">This was a simply shock to me. Here I see correlation to Before 70s and After 70s . What has changed? There was a discussion within friends on this. One said "Now a days males are having more bad habits like Smoking, over Drinking, etc... That is causing all this" Another friend who suggested that "May be women's have better income now (Previous Graph) which "helps" them to take a call if they are not happy in their married life. In old days even if women was not happy she had no option but to stick with husband as she had no economic freedom so in fact it's good development due to economy". Another more conservative friend had strong argument on that comment. He said, "Look no one divorce for pleasure. But if what you are saying is correct, then after 1st divorce, their life should be better off. In reality study shows that in US, Divorce rate for 1st Marriage is 50%, for 2nd Marriage it's 68% while for 3rd marriage it's 78%. Which means that something is wrong in thinking that capacity to take divorce is "helping" factor for happy life!!!."</span></div><div class="separator" style="clear: both; text-align: left;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><br />
</span></div><div class="separator" style="clear: both; text-align: left;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">I had no counter argument on that ... But what worries me is are we going in right direction as a society.</span></div><div class="separator" style="clear: both; text-align: center;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><br />
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<tr><td style="text-align: center;"><img border="0" height="300" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiRjRynk9a7PykzSJ8v2Pm2Dhf1P-uHfXNL-NPGrP17_WJNNR-PkTLHq94ljm0W26h7Fd9XZyOFV6wu5pURjIAKMnwdXmTh5hjAmmzXa70AWKCm5TLd18Z86_uXDDvICBVnHsoNhDmVBBo/s400/marriage.jpg" style="margin-left: auto; margin-right: auto;" width="400" /></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Decreasing Marriage Rate.</td></tr>
</tbody></table><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiRjRynk9a7PykzSJ8v2Pm2Dhf1P-uHfXNL-NPGrP17_WJNNR-PkTLHq94ljm0W26h7Fd9XZyOFV6wu5pURjIAKMnwdXmTh5hjAmmzXa70AWKCm5TLd18Z86_uXDDvICBVnHsoNhDmVBBo/s1600/marriage.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"></span></a></div><div class="separator" style="clear: both; text-align: center;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><br />
</span></div><div class="separator" style="clear: both; text-align: left;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">I see a correlation here Well. There is impact on Marriage rare as well. What may be the reason ? Need to think more ... ?</span></div><div class="separator" style="clear: both; text-align: center;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><br />
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<tr><td style="text-align: center;"><img border="0" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgXm8np-K92MgRiUmaywzPukMr2WpL1CehS4HkRPc4iGWt5_BQ40IuWoHTa6awGEBkQYulBLzfDIJYxoNe3n4EQrBhKxxpN4UiWir-A3ITvLcg_JO_QwW4Rd1Yl07WBnCL-cEOpFQyrhrY/s320/Obesity.PNG" style="margin-left: auto; margin-right: auto;" width="320" /></td></tr>
<tr><td class="tr-caption" style="text-align: center;">Health Data from official Web Site</td></tr>
</tbody></table><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgXm8np-K92MgRiUmaywzPukMr2WpL1CehS4HkRPc4iGWt5_BQ40IuWoHTa6awGEBkQYulBLzfDIJYxoNe3n4EQrBhKxxpN4UiWir-A3ITvLcg_JO_QwW4Rd1Yl07WBnCL-cEOpFQyrhrY/s1600/Obesity.PNG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"></span></a></div><div class="separator" style="clear: both; text-align: center;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><br />
</span></div><div class="separator" style="clear: both; text-align: left;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">What to say here .. Is easy money and credit bubble making us fat also ? at least graph shows it.</span></div><div class="separator" style="clear: both; text-align: center;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><br />
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</span></div><div class="separator" style="clear: both; text-align: left;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">Now to counter all these arguments someone may say that these social issues have nothing to do with paper currency etc..Don't blame all our problems in paper currency... it's a new era and this is bound to happen..... To me it makes a lot of sense in believing that all this has some co-relation with each other and is connected. But I think this is a topic of debate and I welcome comments and arguments here.</span></div><div class="separator" style="clear: both; text-align: left;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;"><br />
</span></div><div class="separator" style="clear: both; text-align: left;"><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">P.S: To add the data I have taken is of 50 Years + ( Thanks to Prof </span><span class="Apple-style-span" style="border-collapse: collapse; font-family: arial, sans-serif; font-size: 13px;">Reeve Vanneman at University of Maryland for her great work on .. http://www.bsos.umd.edu/socy/vanneman/socy441/trends/divorce.html </span><span class="Apple-style-span" style="font-family: Times, 'Times New Roman', serif;">).</span></div></div>Unknownnoreply@blogger.com298tag:blogger.com,1999:blog-7123226793261705826.post-65384807021332820612010-11-14T20:25:00.000-06:002011-09-08T09:18:43.736-05:00Good Investment in Nov 2010 “Real Food Investment Habbit”!!<div dir="ltr" style="text-align: left;" trbidi="on">
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif; font-size: small;">Well, environment seems changing again. Out of PIIGS (Portuguese, Irland, Italy, Greece, Spain) This time Irland is on verge of default and need money (bail-out). This can create some amount of disturbance in markets. Although “Next Euro bailouts” are designed to be least vocal and painless, they will still have same consequences as money has to come from somewhere. If no one pays then of course currency devaluation pays. Which means you and me have to pay more for gas, food, and everything.</span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small;">Anyway while many people will be busy in figuring out on direction of stock, what happens to Ireland, credit default swap, ECB reaction, derivatives, and so on, I believe it will be good “investment” to stockpile rice, wheat, salt, beans, lentils, pigeon pea, coffee, tea, and other food items that you need on day to day basis for personal consumption. If possible for next 2 Years! Here are the reasons why I believe this.</span></span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small;"># Baring few exceptions like India and China, Food prices are still relatively low in many countries. (Even in India and China, though they are high, 2-3 years down the line they will be possibly much higher)</span></span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small;"># With amount of stimulus injections, everyone knows that there will be inflation for years to come so what you buy this year will always be cheaper than next year.</span></span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small;"># Inventories of food are lowest in decade across the world and there are multiple reasons for the same. </span></span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small;"> # Due to constant urbanization across world, labor is not available for farming.</span></span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small;"> # There is no reverse flow of labor from cities to villages for farming.</span></span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small;"> # Weather has turned unpredictable resulting possibility of very bad weather in any year.</span></span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small;"># If the fear of hyperinflation turns into reality, 3-4 years down the line, people who maintain habit to stock “basic grains” will survive better out of situation. </span></span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small;">Like every investment there are risks for this. E.g. grain that is accumulated can catch various pest, infections etc.. so we should learn some good techniques for the same. Also we need to consider expiry date / best before date for things we buy. On cost side if the cost goes down suddenly, we can buy from market for temporary consumption and keep our stock intact. Some grains like rice are in fact better when they turn older. One of the very interesting case I saw in one video over YouTube where American person explaining rice and bean as good combination. Reason it is interesting is rice is not typically consumed in US.</span></span></div>
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small;">To add there is no need to assume we are doing this for preparing for war etc..:) but there is nothing wrong in being planned for everything in life.</span></span></div>
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Unknownnoreply@blogger.com5tag:blogger.com,1999:blog-7123226793261705826.post-81073465291573154592010-10-31T23:55:00.012-05:002011-11-23T13:16:01.202-06:008 Phase Economic Cycle in Central Banking System and Fed's Next Stimulus<div dir="ltr" style="text-align: left;" trbidi="on"><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"> October was a busy month and hence could not write much, but a lot happened over this month. Federal Reserve started talking about confirming Stimulus II / QE II (Printing Money out of thin air and Spending it once again). It was highly anticipated since last few months. Now before jumping into impact of Quantitative Easing on us, let's try to understand some basic economic cycle in Central Banking.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Here is the presentation that I believe will be useful to understand the same. I have articulated <u><b>"8 Phase Economic Cycle in Central Banking System"</b></u><b> </b> that has been running since beginning of Central Bank system e.g. (1913 in US). Please open it in separate window to see completely.</span><br />
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<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgOGNhIJeaOAYLhtf1LabYygvbJ_nR8D1NUoXf5tM0EnFjreb3uassNhAhpapOtJ1EZaPPao0d5-6FLDbDjHhzAixhaZ-DTxjiKSnOszsZGefJtBINB9FJ2tOJrB7cQhFXmv25bU3rzb6c/s1600/Economic+Cycle.PNG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgOGNhIJeaOAYLhtf1LabYygvbJ_nR8D1NUoXf5tM0EnFjreb3uassNhAhpapOtJ1EZaPPao0d5-6FLDbDjHhzAixhaZ-DTxjiKSnOszsZGefJtBINB9FJ2tOJrB7cQhFXmv25bU3rzb6c/s320/Economic+Cycle.PNG" width="320" /></a></div><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">In order to prove demonstrated cycle, see graph below from Federal Reserve's site that shows both Interest Rate and (Recession periods with gray bars.) What you can clearly observe is,</span><br />
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<div style="margin: 0px;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"># Every time recession comes i.e. we enter in gray area, Central Bank lower interest Rates.</span></div><div style="margin: 0px;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"># Baring early 90s recession for all other cases, higher interest rates have become pin for recession.</span></div><div style="margin: 0px;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><b></b></span><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><b></b></span><br />
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjLLBRszf06NuPwWQqGMeCsNbR-9F9VhGlXQkKpC34o2OAxhkICqGaBBPnUTcqqJU5dxZkVUfS3uemdQDLgvL7SJ6jsc0Q9foXXGUgEKxoY8V097ABjlFFBiBNViZ27lSMTh_2usPzFG6E/s1600/US+Recessions.png" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjLLBRszf06NuPwWQqGMeCsNbR-9F9VhGlXQkKpC34o2OAxhkICqGaBBPnUTcqqJU5dxZkVUfS3uemdQDLgvL7SJ6jsc0Q9foXXGUgEKxoY8V097ABjlFFBiBNViZ27lSMTh_2usPzFG6E/s400/US+Recessions.png" width="400" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;">US Recessions</td></tr>
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<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjWkHj1yR5VfyDAA37MXFYIPLnD_dEdDFipT5i72L-euglbu7yP_f54oKIh-BOlCkX2o2VTGeOG4sRnVaV6QLP7YVLU-8yGAhZ90NK0_7gGN9O7zNgquj-AVTvNgX_8c2w0VSyoSVc15hI/s1600/fredgraph+(1).png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><b></b></span></a></div><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">From 1980s till date Interest Rates are clearly going down as a trend. In US. (Reason why everyone has some connection with US monetary policy is that USD is world reserve currency and all currencies are pegged to USD except few. Hence everyone is impacted by USD in some or other way)</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">What differentiates 2008 crisis than all previous recessions are below facts.</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"># Continuing it's downward trend, Interest Rates are actually touched "0" (indicating weak and phony system) and economy still could not come up.</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"># So as additional measure, Lot of money was printed out of thin air in 2008-2009 (Which has never happened to this extent) and FED is speaking to "Act More"!!! </span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">#Graph below shows base money which is very sensitive thing. As you can see since 1910, this is the first time it has been increased this high.</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">#During 80s, Reason for 20% + Interest rate was to soak out 13% additional liquidity introduced in 70s. Here Base has increased by 120% and they are speaking of increasing it even more in QE II. Just imagine interest rates in 2020. </span><br />
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<tr><td style="text-align: center;"><img border="0" height="240" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEifd4absFgXu2ciPVPk2incJvdVIfTJ1-WPJW-jZfIJbcR9ju-mDcIblvvYbyopSjsrQEQLEyjEJfmpakowN2Lk86otEEhiInI-xOFgaND9yeTA1rcTAZ-Nw9Rz8ykuV4sOt5XaugklfV0/s400/Money+Supply.png" style="margin-left: auto; margin-right: auto;" width="400" /></td></tr>
<tr><td class="tr-caption" style="text-align: center;">US Money Supply</td></tr>
</tbody></table><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEifd4absFgXu2ciPVPk2incJvdVIfTJ1-WPJW-jZfIJbcR9ju-mDcIblvvYbyopSjsrQEQLEyjEJfmpakowN2Lk86otEEhiInI-xOFgaND9yeTA1rcTAZ-Nw9Rz8ykuV4sOt5XaugklfV0/s1600/Money+Supply.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><b></b></span></a></div><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">In short since we are stuck in Phase 1 out of 8 Phase cycle, as demonstrated on Presentation above, FED is printing huge money to send economy to Phase 2,3, 4. Obviously consequences are clear as there are only 3 Roads that go from here. </span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"># If we succeed to Go to Phase 2, 3, 4 we will have great economy to begin with and very low unemployment in theory, but later it will turn out to be Zimbabwe style Hyperinflation, Price Controls and so on in whole world except few creditor nations.</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"># If we never succeed Go to Phase 2, 3, 4 (like till now ) we will end up in Stagflation i.e. both high unemployment and high inflation (But not hyper).</span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"># If someone like Paul Volker comes again, who understand system better, for restoring currency value he will raising interest rates significantly and will allow severe but essential recession (this is rare as it won't get political buy in.). But the only possible solution for survival in long term.</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">Let's see where we go...</span></div></div>Unknownnoreply@blogger.com46tag:blogger.com,1999:blog-7123226793261705826.post-45420581233151210342010-10-05T23:08:00.002-05:002011-11-17T21:19:44.681-06:00Billionaire Beggars<div dir="ltr" style="text-align: left;" trbidi="on"><span class="Apple-style-span" style="font-size: small;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">“Billionaire Beggars” It may sound funny / crazy / or even stupid term, but looking into speed at which liquidity is flowing into the system with no control whatsoever, this term will become reality one day in near future. May be as early as next (5-10 Years). Unless Central banks act aggressively in reverse direction than their current approach.</span></span><br />
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<span class="Apple-style-span" style="font-size: small;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">I heard story of one such “case study” from an old respectable man last Sunday here in Milwaukee at Coin exhibition. He and his wife sell world paper currency as a side business. Old man is highly knowledgeable in history, currencies and economics, and very kind to share his knowledge. According to him “Every currency note has a story”. </span></span><br />
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<span class="Apple-style-span" style="font-size: small;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">This time around we bought currency notes of 5 Million-Deutsch Mark during Weimar Republic and asked him story behind it. He said, “This is a 1923 Vaimar Republick note” pointing to his wife he continued, “ Her father was in Germany during those days (1918 – 1923). He was paid twice a day with notes that may fit in a large suitcase. With those notes they used to stand in line for bread and soup. By the time they enter in queue till they reach the window, prices used to increase.” He added that “There used to be around 60 Printing presses all over the Germany that run 24*7 to print money”.</span></span><br />
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<span class="Apple-style-span" style="font-size: small;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">In short “Billionaire Beggar was reality of those days” As if one don’t have job, even if he possess a billion Deutsch Mark cash, he is not able to buy anything with it since 1 pound of bread would cost 3 billion by Nov 1923. And there was Inflation rate of 29,500% making price double every 3.7 days.</span></span><span class="Apple-style-span" style="font-size: small;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"> So with just 1 Billion-Deutsch mark in hand and no Job, one is both Billionaire and Beggar.</span></span><br />
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<tr><td style="text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgfwmh3hVs5jXmgvwt8HPfia6LJBRuMUi3mHzNkCUvTxTcnpTESVsFa4ssrCO-Pe_khyphenhyphenmXOEOsyAhM77JBG0XdTN-H4jDYdcLd_GhvuaO5rRDM2KK_e8SpZo46M3tcoFgN0c80ahN8p5xo/s1600/Waimar+Republic+Inflation.jpg" imageanchor="1" style="margin-left: auto; margin-right: auto;"><img border="0" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgfwmh3hVs5jXmgvwt8HPfia6LJBRuMUi3mHzNkCUvTxTcnpTESVsFa4ssrCO-Pe_khyphenhyphenmXOEOsyAhM77JBG0XdTN-H4jDYdcLd_GhvuaO5rRDM2KK_e8SpZo46M3tcoFgN0c80ahN8p5xo/s400/Waimar+Republic+Inflation.jpg" width="292" /></a></td></tr>
<tr><td class="tr-caption" style="text-align: center;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif; font-size: x-small;">As you can see in image, Inflation in the Weimar Republic made it cheaper for this woman to burn money than firewood to keep her home warm.</span></td></tr>
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<span class="Apple-style-span" style="font-size: small;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">When I asked him that is that not the same thing we are doing now a days (Printing Money like crazy) and will there be similar results in his opinion? With a big pause he said, “I hope we are not. But I am worried that we actually are. Nixon just declared that currency is not backed by anything and we accepted the dollar the way it is… And see what’s happening today… And you know who wins at the end? …… It’s Farmer. As you have to give your everything to him… If you are left with anything ”.</span></span><br />
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<span class="Apple-style-span" style="font-size: small;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">So definitely it’s a big time possibility that we are about to enter in that era. Let’s see this time how high the price of bread goes. Also this era will be slightly different as it will be global synchronous phenomena.</span></span><br />
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<span class="Apple-style-span" style="font-size: small;"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;">However on very interesting note, Germany who has this history of hyper inflation is now very worried about stimulus and it’s impact and is 1st to at lease speak about unwinding stimulus and introducing austerity. It will be interesting to see if Germany can learn from history and avoid repeating it. Or will eventually join the flow…</span></span></div>Unknownnoreply@blogger.com0tag:blogger.com,1999:blog-7123226793261705826.post-62965032471184225932010-09-29T23:33:00.000-05:002011-09-08T09:19:16.635-05:00Small Update Uncertainty, Pressure again on !! - Correction ??<div dir="ltr" style="text-align: left;" trbidi="on">
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small;"><b>China, Japan, US</b></span></span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif; font-size: small;">China who is praised for it's economic policies and growth by Very Important Persons like "George Soros", "Jim Rogers", is passing through tough phase. Recently there has been some "ego issues" with Japan over sea dispute. Although China came out of it with upper hand, with historical reference, China can never take Japan lightly..</span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small;">At the same time, US has been "very seriously" behind China for quite a some time. Looks like current administration is going to follow it up till China takes concrete steps. It will be very very interesting to see how China reacts to this. But hopefully both parties will find mid way path over the time.</span></span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small;"><b>European Union</b></span></span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small;">In Europe, PIIGS are again under pressure. Despite 1 Trillion fund created to help PIIGS, Portugal had done Salary cuts of 5% in Govt Jobs. So there is pressure on Euro again.</span></span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small;"><br /></span></span><br />
<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small;">In short US, China, Japan and Europe That constitute 70% of World GDP, (14.26, 4.909, 5.068, 16.24, 58.15 respectively out of total $58.15 World GDP) are still not out of woods and hence there will be volatility to continue. </span></span><br />
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<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif; font-size: small;"><u>However unless something unbelievable happens, I do not see a change in UP Trend in Stock Markets except possible major correction (that may appear as change of trend) in time to come.</u></span></div>
Unknownnoreply@blogger.com1tag:blogger.com,1999:blog-7123226793261705826.post-47964193081168810442010-09-22T00:01:00.000-05:002011-09-08T09:19:38.212-05:00Does weak Currency really Help Exports .<div dir="ltr" style="text-align: left;" trbidi="on">
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Recently, there have been huge arguments between US and China on "Yuan appreciation" with both sides sticking to their points. US firmly believe that China is getting "unfair advantage" in export due to pegged currency; while China believes their currency is "their own call". We don't know what is right or wrong, but we thought of checking if there is any "real" correlation between Exchange Rate and Export.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhi780vCxYxsVjB0X7h64u23pjYER8cqw-3mo_vEVcyMCH0e8Qs4D2ymDSgED_X338f9YH3HR7Z2WWv5aIK2kLEVek3A3RxA8lNqRHiZUJRQ1PIY4m6MfLC0Cyw36qZPxTUg1XgbQq3UeQ/s1600/Country+Compare.PNG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="158" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhi780vCxYxsVjB0X7h64u23pjYER8cqw-3mo_vEVcyMCH0e8Qs4D2ymDSgED_X338f9YH3HR7Z2WWv5aIK2kLEVek3A3RxA8lNqRHiZUJRQ1PIY4m6MfLC0Cyw36qZPxTUg1XgbQq3UeQ/s400/Country+Compare.PNG" width="400" /></a></div>
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* Figures in Million </div>
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Source: CIA Facts.</div>
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Taking Data from CIA facts and just looking at it we can see that saying "there is direct co relation between currency and export" is misleading. As If there would have been one, Zimbabwe should have been biggest Exporter or at least on improvement trajectory. Germany on the other hand should have been smallest exporter. In reality it's exactly opposite.</div>
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Although China has taken over Germany's No 1 Position as largest exporter, Germany has been there for a while, and in Ratio of Export to GDP at this volume, it's still No1. This is despite having one of the Strongest Currency (nominally); so for sure there is lot more to be " Successful Export oriented Nation" than just currency.</div>
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Obviously, it is story with US, despite USD being still a strong currency (in nominal terms relative to other currencies) Export figure is still huge. What's common in between these 2 nations is their technological edge led by innovation. e.g. no matter whether their currency become stronger or weaker, Intel Chip has to be bought from US. Steel that is used in orthopedic operations has to be bought from Germany, as it does not rust for 200 Years there is no alternate. </div>
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China on the other hand has slight different story, as their "Export Model" is slightly different. As I see it's based on strong will power from government, great Infrastructure and most importantly "conservative living standards".</div>
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On the down side, cloths and shoes and other daily use items that China export can be technically manufactured by others countries as well.</div>
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However making Chinese Yuan strong can have very interesting implications in short, mid and long term. In short term, it can alleviate inflation in china while it can stoke inflation in US as Wal-Mart won't change their vendors immediately and Vendors will raise price as they won't do business in loss. </div>
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In Mid term, it depends on whether China and Chinese People continues their policy to keep low profile and continue "Low Profit High Volume" Export or encourage internal consumption becoming a developed nation in itself. They can do both as e.g. If today Chinese household is getting 60,000 and is saving 30,000 If Yuan gets double, Technically Chinese Household will have same purchasing power with 30000 Yuan and even if he saves 15,000 he is good. In short higher purchasing power and possible efficiency improvement programs in Supply Chain can absorb the loss of competitiveness due to currency appreciation.</div>
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Another aspect to it is in Transition phase, countries like India, Philippines, Indonesia can take advantage of this phase and develop their manufacturing base leveraging their high population and weak currency becoming a strong competition for China. However doing so need a lot of planning and determination at political, social and Industrial level. If not, Higher Yuan will just mean higher prices for whole world in short term and even stronger economy for China in Mid and Long Term.</div>
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Unknownnoreply@blogger.com2tag:blogger.com,1999:blog-7123226793261705826.post-45693484414712412752010-09-20T23:50:00.000-05:002011-09-08T09:23:09.789-05:00Short Update - India BSE Sensex Rocks 20,000 thanks to .... ? FIIs ?<div dir="ltr" style="text-align: left;" trbidi="on">
<span class="Apple-style-span" style="font-family: Arial; font-size: small;"><span class="Apple-style-span" style="font-size: 13px;">Couple of weeks ago I predicted... </span></span><br />
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<span class="Apple-style-span" style="color: #0a2f9b; font-family: Arial, Helvetica, sans-serif; font-size: small; line-height: 18px;">Dow may have Huge upside i.e. even in range of 35000 - 45000 i.e from 2012 - 2016. (World Markets will follow the trend e.g. Say FTSE UK may touch 20000, BSE Sexsex India may touch 60000 - 70000)</span></div>
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<span class="Apple-style-span" style="color: #0a2f9b; font-family: Arial, Helvetica, sans-serif; font-size: small; line-height: 18px;"><a href="http://amareshgangal.blogspot.com/p/top-predictions.html">http://amareshgangal.blogspot.com/p/top-predictions.html</a></span></div>
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<span class="Apple-style-span" style="font-family: Arial; font-size: small;"><span class="Apple-style-span" style="font-size: 13px;"><span class="Apple-style-span" style="color: #0a2f9b; font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small; line-height: 18px;"><br /></span></span></span></span></div>
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<span class="Apple-style-span" style="font-family: Arial; font-size: small;"><span class="Apple-style-span" style="font-size: 13px;"><span class="Apple-style-span" style="color: #0a2f9b; font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small; line-height: 18px;">Obviously current market rally is part of same. There will be some interesting advantages and threats India as a country will experience out of this huge upcoming rally. Since this is capital inflow, INR will become stronger gradually against USD till the music is on e.g. at the end of 2016 or whenever this Rally finds it's top, INR - USD conversion may become in bracket of 30 - 35 or even better. However if there in intervention by RBI to keep INR down, That can prove very very costly down the road. </span></span></span></span></div>
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<span class="Apple-style-span" style="font-family: Arial; font-size: small;"><span class="Apple-style-span" style="font-size: 13px;"><span class="Apple-style-span" style="color: #0a2f9b; font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small; line-height: 18px;"><br /></span></span></span></span></div>
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<span class="Apple-style-span" style="font-family: Arial; font-size: small;"><span class="Apple-style-span" style="font-size: 13px;"><span class="Apple-style-span" style="color: #0a2f9b; font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small; line-height: 18px;">Because when the music stop, there will be huge capital flight out of country and currency may swing back from it's position to downside may be 45 - 65 even may be 75 when measured in USD. very suddenly. This itself will trigger to Currency Crisis of India.</span></span></span></span></div>
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<span class="Apple-style-span" style="font-family: Arial; font-size: small;"><span class="Apple-style-span" style="font-size: 13px;"><span class="Apple-style-span" style="color: #0a2f9b; font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small; line-height: 18px;"><br /></span></span></span></span></div>
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<span class="Apple-style-span" style="font-family: Arial; font-size: small;"><span class="Apple-style-span" style="font-size: 13px;"><span class="Apple-style-span" style="color: #0a2f9b; font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small; line-height: 18px;">Inflation would have reached far high by then however since market will be doing good overall liquidity will take care of people's sentiments. But when music is off and Inflation is at it's top, There will be lot tough time to fact. </span></span></span></span></div>
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<span class="Apple-style-span" style="font-family: Arial; font-size: small;"><span class="Apple-style-span" style="font-size: 13px;"><span class="Apple-style-span" style="color: #0a2f9b; font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small; line-height: 18px;"><br /></span></span></span></span></div>
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<span class="Apple-style-span" style="font-family: Arial; font-size: small;"><span class="Apple-style-span" style="font-size: 13px;"><span class="Apple-style-span" style="color: #0a2f9b; font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small; line-height: 18px;">Another interesting opportunity that may arise of this is if currency crisis first start in Western world, and INR is fully convertible by then, there is also a remote possibility of huge surge to INR vs USD or Euro e.g. in Range of 20 - 25 </span></span></span></span></div>
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<span class="Apple-style-span" style="font-family: Arial; font-size: small;"><span class="Apple-style-span" style="font-size: 13px;"><span class="Apple-style-span" style="color: #0a2f9b; font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small; line-height: 18px;"><br /></span></span></span></span></div>
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<span class="Apple-style-span" style="font-family: Arial; font-size: small;"><span class="Apple-style-span" style="font-size: 13px;"><span class="Apple-style-span" style="color: #0a2f9b; font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small; line-height: 18px;">Both these possibilities are there and events to come in years ahead will decide where it will go.</span></span></span></span></div>
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<span class="Apple-style-span" style="font-family: Arial; font-size: small;"><span class="Apple-style-span" style="font-size: 13px;"><span class="Apple-style-span" style="color: #0a2f9b; font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small; line-height: 18px;"><br /></span></span></span></span></div>
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<span class="Apple-style-span" style="color: #0a2f9b; font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small; line-height: 18px;">P.S. : Every bull market will have corrections I am not sure of that will be as radical as Robert Prechter says but there can be corrections.<b> " However till the time there is a Direct pipeline between Fed to all Brilliant Wall street Investment Banks and Investment Banks to BSE I do not see any reason for change in Trend"</b></span></span></div>
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Unknownnoreply@blogger.com3tag:blogger.com,1999:blog-7123226793261705826.post-58943568054196454272010-09-06T13:50:00.000-05:002011-08-13T13:52:16.879-05:00Robert Prechter says Dow can go as low as 1000. Dr. Marc Faber says as high as anything to whom should we listen to?<div class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small;">It is said “If you ask same question to 10 economist you get 10 different answers.”</span></span></div><div class="MsoNormal"><br /></div><div class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small;">I have been following Dr. Marc Faber for a while and I am one of the big time fans of him. Robert Prechter who is another “Gray hair Wall street guru”, believes in Elliott Wave Principal can not be ignored. Even Dr Marc Faber says that we cannot dismiss him. </span></span></div><div class="MsoNormal"><br /></div><div class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small;">Dr Faber’s prediction is based on philosophy that till the time Fed keeps “Money Tap” ON and does not soak any liquidity out of system (by keeping ~ 0% Interest rate), markets will go up and up!! What we saw from Mar 2009 till date is exactly the same. None of the economic parameters have improved unemployment is at it’s record high. Still market is UP. And hence Mark Faber is right.</span></span></div><div class="MsoNormal"><br /></div><div class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small;">At the same time if you were tracking the news and market carefully since Sep 2007 (when Sub Prime issue was open to public) you can see that Markets were going down though FED was “co-operating”. Since Sep 2008 Fed started lowering Interest rates and made it effectively 0 in early 2009. At the same time via various means Fed “bailed out” number of Financial Institutes like never before. Still Dow travelled from 14000 - 6600 From Oct 2007 to Mar 2009. </span></span></div><div class="MsoNormal"><br /></div><div class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small;">So saying that If Fed Print money market will go up may prove wrong in Short term. </span></span></div><div class="MsoNormal"><br /></div><div class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small;">In March I remember mood was extremely pessimistic despite all bailouts money and support from governments. Dow was going down daily by 4-5% and there was not a single “good news” in media. People were angry on Banks, governments. Suddenly news came from Citibank saying they are expecting profit in Q1 2009. According to me that was a turning point in this recession. So we can’t ignore that even “news” can change the trend of market. And of course once city says that they expect profit their competitors have to say that they are expecting profit sooner or later and that changed the direction. So if that news would not have came Robert Prechter's figure of 1000 was perhaps only few weeks away. </span></span></div><div class="MsoNormal"><br /></div><div class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small;">Once the direction was changed, 0% Interest rate and bailout money started working and it gave a huge rally of almost 6600 – 10600 in same year.</span></span></div><div class="MsoNormal"><br /></div><div class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small;">Concluding: For Common man it’s best to remain diversified strictly as all these big names can be correct in some or other way and if you are not diversified it can be very risky at times. Before ending let me put one sentence that I heard in this week from David Morgan “If all are thinking same then perhaps no one is thinking really”.</span></span></div><div class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small;"><br /></span></span></div><div class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small;">Thanks</span></span></div><div class="MsoNormal"><span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif;"><span class="Apple-style-span" style="font-size: small;">Amaresh Ashok Gangal</span></span></div>Unknownnoreply@blogger.com1