Sunday, September 27, 2009

In the shoes of a novice observer... A covered-up recovery!

Why I feel the economic "recovery" - based on recent economic data - should be cautiously considered..

To begin with. The jump in stock markets cannot be considered a confirmatory recovery signal. Stock markets are speculative indices and are based on the whims of most people more than hard-facts.

The hard-fact is that a 260Trillion dollar asset bubble burst in this recession. Most of this 260 trillion dollars is frozen shadowy assets. And all stimulus packages combined - about $2 odd trillion - account for a meager percent of the actual damage. All these apparent "positive" signals are nothing but effects of the stimulus packages that were let out to lubricate financial clogs. And giving policy-makers their due credit, the clogs are opening up.. thanks to these tax-payer buoyed stimulus packages. Which is why we have the good positive data flowing in. But, at the end of the day, there is nothing huge to celebrate. Cause inevitably, we're to plunge back into the abyss.

As far as the real estate markets are concerned. Yes, they are showing healthy signs of recovery. But, with the many billions of dollars going back into the rusted banking systems and in turn being used to unlock most of the troubled real-estate assets - answers for the price-rise & demand for land. Once these billions of dollars stop pouring in... the demand will slip back... Cause, real estate too is a speculative market. Huge investments (again, indirectly through stimulus packages) came in, and investor sentiments soared along. Accounting for the spike in prices so far.

Commodities. Well they aren't rising due to any economic upheaval. Poor monsoons have created the deficit between the demand & supply chains. Which answers for food price rise.

Ben Bernanke of the Fed. Reserve says that the US is out of recession. But he also says that job stability and economic equilibrium will take time to return to normalcy. Hmm. ??
All the economic data released so far... has been released by governmental agencies.
Whenever there is any kind of calamity, the government deflates the actual number of casualties. So why not, in times of apparent recovery, the government be inflating its figures? I mean it may sound insane to suggest, but think about it.. it is a logical possibility!

So thats that. We need to exercise a little more caution celebrating over good times - which will eventually come - but not so fast. Two years and $2 trillion dollars don't seem enough to weather decades and hundreds of trillion dollars of mess!

Tuesday, September 15, 2009

Getting candid with Nikhil Nigade

Had a grand-time interviewing a very good friend, a young-entrepreneur and an idea-machine, Nikhil Nigade.
He is a cook, a photographer, an artist and a web designer who pursues genetic engineering as a hobby. Certainly, a strange combo :O

So we got down to our tete-a-tete where I threw at him both personal and professional questions, which I might unflatteringly add, were smartly answered.

How do you feel about being a young and raring-to-explore-new-ideas entrepreneur.
It might sound fun and exciting, but trust me, its not all that great when you're approaching dead-lines with loads of work at hand. But yes, I can't deny that its a great feeling.

Do you feel proud, in the right sense of course?
We all have egos, i'm no exception, so yes.
Where do you want see yourself 20 years down the lane?
{Pat comes the reply} As the person behind the making of Pune as the Global designing capital.

Ok. Art is pretty much a saturated industry with scores of extremely talented people lying around. Why choose this as a career?
See. Motion designing isn't a popular concept in India. And all our motion-designed films are contracted through American/Hollywood firms. I wish to bring motion-designing in India which hasn't been significantly tapped here.

Now, why focus on establishing a business when you should be giving attention to your 12th board exams and education?
What I'm gaining doing the former is, that I'm experiencing the practical reality of the world. This, according to me, is the best form of education. Experience is priceless compared to theory. However, if need be, I'll put in another year to do well in my 12th exams, which are pretty much crucial too.

Your take on nerds, who put in 16-17 hours of their time to crack into the IITs?
Man, don't kill me! [Come on, give them an adjective!] {laughs} Dude, they're highly PATIENT! [Thats the most respected comment possible! I fall down laughing since I was sure he was thinking of an abuse :P]

What about politics? And my favorite question to all Maharashtrians, your take on Raj Sahib of the MNS!
Politics. Nah, not my cup of tea. And Raj; his theory is right but his implementation is wrong.
You're take on the interview and interviewer?
Interesting interview. And you'll remain my good friend. [I laugh, but don't understand shit about that response! haha]

The second interview in my interview-series. Brace up guys, I could be knocking on your door any moment with my questionnaire in hand!

Saturday, September 12, 2009

The BIG-Economic bubble!

One-hundred people own the same One-hundred rupees. Confused? Read along. This, however, isn't supported by immaculate data but simple amateurish observations.

You earn a hundred rupees after a hard day's/hour's/minute's/whatever's labor.. (Hundred bucks since we don't want to complicate an already seemingly complicated topic) So... You're happy you made a century with money... and you go jovially to the bank and deposit your hard-earned bucks expecting interest off them. Now. The bank promises you an 8-10 odd percent of interest. But ever wondered where the hell do they (the banks) manage to make a 15% cut (I mean, they too need to earn right?) off your and thousands of others' similar hundred bucks? Right? So, they loan your hundred bucks off to another party at 15% interest. Now, if this party is paying a 15% interest on the loaned principle, they too need to make their buck right? They too need to make profit! Which means they need to earn at least a 20% on that hundred bucks (which is yours, mind you) so as to run their enterprises! Now if they need to do that, they need to pass it off to another further party at a higher rate of return. So you get the picture. This chain is endless. And, notice! At the same time. You own that 100 rupees. The bank owns that 100 rupees. The party owns that 100 rupees. The further-party owns that 100 rupees. And so on, till wherever the chain runs to! Woah! Hard to digest? Well, here comes more!

The government taxes you on your hundred bucks. Ok. The government taxes the bank on the bank's net asset value (which includes your hundred bucks and those of several thousands of people). The government taxes the people who take money on loan from the banks. The government taxes everybody in the friggin chain! So where the government should have earned a modest 30% (max) or 30 bucks on a 100 rupees. It is making thousands of bucks on the same, your hundred rupees. In reality, there is only a hundred rupees. But due to such woven complicated chains, we have inflated the country's wealth. Which is why, perhaps, we're looking forward to plunging in abysmally high rates of inflation in the future. Which is why, perhaps, we’re sitting on such high fiscal deficits. Which is why, perhaps, the rich are getting richer, and the poor are getting poorer. And so on.

To sum it all up. In reality, there is only a hundred rupees existing. But due to this network of unending economic on-paper chains, the same hundred rupees is owned by a hundred people which makes it an astounding ten-thousand bucks! You understand the deficit, right?

This might seem highly opinionated and unnecessarily blasphemous. Comments are welcome.

Monday, September 7, 2009

Getting Candid with Abhishek Borkar!

I had the splendid opportunity to interview a musical prodigy, the 17-year old master-Sarodist (an Indian classical music instrument, more of an Indian guitar) Abhishek Borkar. He's been a devout musician since age 7, and did his first concert at age 10!

So, here I was, taking an interview as casually as I could i.e. while playing cricket! :)

Me:Whats your take on Himesh Reshammiya?
AB: [diplomatically] He is doing something in the field of music. So thats about it.
Me:Any musician you'd like to kill?
AB: Huh!! Never! I'd rather suicide.
What if your lady-love is a non-musician? Will your parents' accept her?
Sure! Why not! In fact, that is what I want since a musician-partner would create competition and add tension to the marriage [Thats good m'lad, thinking about marriage already! :D]
Any other passions in life, other than the Sarod and music?
[with conviction] No, the Sarod is my life!
What is your take on Paki-bands?
They're definitely better than the Indian ones. However, I despise the competition-factor thats been created between the two by the media. They both are good in their respectful ways, however, this unnecessary hype doesn't help the cause of music.
What role do you see yourself playing as a musician in the future?
I've dedicated myself to the cause of music. I'll be a musician come-what-may my entire life. Maybe as an entertainer, as an awareness-creator or so on. But my life's purpose will be lost, if im separated from music
Deviating from the topic, your take on specimens such as Raj Thackeray?
I'm into politics.. Well.. uhm.. Yea.. Umm.. [dude, get to the point!] I'm not into politics!
And to end it, your take on the interviewer? :D
Your first interview right? Haha, dude, not bad! [Oh well, Thanks :P]

Friday, September 4, 2009

When you have it- you hate it. However- it turns out to be the first thing you miss when it's GONE

Neighbours. What do we think of them? If you were mom and you saw a neighbour passing by- you'd say "Aa ja! Chai peeyegi?" and spend the rest of the evening chatting merrily. If you were dad in the same situation- you'd step out of the house and talk for 5-10 minutes about the re-making of the society road or the stock market. If you were ME in the same situation however-you'd either blatantly ignore your neighbour, or give him a nod of acknowledgement- or maybe a wee smile saying you know him- and it passes. Yes folks-I'm a sinister woman who's been MEAN to her neighbour. I admit it.
It started 4 years back. When I shifted from my old home to my current- I didn't even know what owning a row-house meant. When I got here- I saw that technically it was one big bungalow divided into two- one half is yours- the other your neighbour's. One fine evening- Mom and I went to meet them. Well-perfectly NORMAL evening for all those dramatists out there expecting a storm or some other harbinger of doom! The door was answered by a sweet Parsi Lady who looked like she always had a smile plastered on her face. I swear I'll NEVER forget Aunty's smile. And yeah- behind her was her fair, same height as me, full of baby fat son. That was 8th man- we played merrily together for 2 years after that- be it football, chor police- ANYTHING.
10th- we hardly spoke much- even if we did- it was through the net.
Me and Mom in backyard. We hear an AMAZING OUT OF THE WORLD howling. Me: Have the wolves started rounding up on us??
Mom: It's your sweet neighbour... HELLO!?
(He pops his head out) He: Yes Aunty?
Mom: You sing.... very well!!
He: (clearly pleased) THANKS AUNTY!
(goes back and continues) I rolled my eyes.
Sarcasm clearly dripped off him.
Thereafter we were subjected to concert after concert of his expert bathroom singing.(row houses have common ducts...) which was- annoying- yet entertaining!
Then it happened. Aunty fell ill. Her foot had been cancerous-so they had gotten her leg amputated- and she had been living on a plastic foot. Suddenly the cancer had begun to spread again. She was hospitalised, put on chemo, and my parents went to visit her often. I then realised that- I had never given my neighbours a second thought. Taken them for granted. I began to think of her every day and night, and even though I'm not religious, prayed piously for her daily. That's when it hit me- the awkward shy bathroom singer boy that I had for a neighbour- was actually THE BRAVEST PERSON I HAD EVER MET.
Mom told me how he had to bathe his mother sometimes. How he cookes anda burji for him and his brother. (which I am thoroughly INCAPABLE of without major threat to myself and my surroundings...) Thinking of this now makes my hair stand on end.
And then she just.... died.
We didn't speak at all. Maybe I didn't know how to break the ice- and neither did he. Whatever be the reason- it still is like that. His younger brother was affected severely- as he began failing in school. As for the older however- we were in 10th- he tried his hardest to give the Board his best shot- and got 78. I think he's a genius. I personally- would have failed.
11th- he went to boarding. It's funny how you hate things when you have them- and miss them as soon as they're taken away. One thing I know- I would never have been able to say this to his face. I am feeling MUCH better after writing this.... I guess that's what blogs are for huh? :) :)

Funny thing, the Tax system!

The piece below has been written by:

David R. Kamerschen, Ph.D.,
Professor of Economics,
University of Georgia

Suppose that every day, ten men go out for beer and the bill for all ten comes to Rs100. If they paid their bill the way we pay our taxes, it would go something like this:
The first four men (the poorest) would pay nothing.
The fifth would pay Re1.
The sixth would pay Rs3.
The seventh would pay Rs7.
The eighth would pay Rs12.
The ninth would pay Rs18.
The tenth man (the richest) would pay Rs59.
So, that’s what they decided to do. The ten men drank in the bar every day and seemed quite happy with the
arrangement, until one day, the owner threw them a curve. ’Since you are all such good customers, he said, ‘I’m going to reduce the cost of your daily beer by Rs20.
Drinks for the ten now cost just Rs80.
The group still wanted to pay their bill the way we pay our taxes so the first four men were unaffected. They would still drink for free. But what about the other six men – the paying customers? How could they divide the Rs20 windfall so that everyone would get his ‘fair share?’ They realized that Rs20 divided by six is Rs3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer. So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.
And so:
The fifth man, like the first four, now paid nothing (100% savings).
The sixth now paid Rs2 instead of Rs3 (33% savings).
The seventh now pay Rs5 instead of Rs7 (28% savings).
The eighth now paid Rs9 instead of Rs12 (25% savings).
The ninth now paid Rs14 instead of Rs18 (22% savings).
The tenth now paid Rs49 instead of Rs59 (16% savings).
Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.
‘I only got a rupee out of the Rs20,’declared the sixth man. He pointed to the tenth man,’ but he got Rs10!’
‘Yeah, that’s right,’ exclaimed the fifth man. ‘I only saved a rupee, too. It’s unfair that he got ten times more than I!’
‘That’s true!!’ shouted the seventh man. ‘Why should he get Rs10 back when I got only two? The wealthy get all the breaks!’
‘Wait a minute,’ yelled the first four men in unison. ‘We didn’t get anything at all. The system exploits the poor!’
The nine men surrounded the tenth and beat him up. The next night the tenth man didn’t show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!
And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up anymore.
In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.

Thursday, September 3, 2009

How Anil Ambani makes 21 crores in 20 days!

Well, to begin with.. this ain't a spoof-spoof. But its definitely awe-inspiring and hilarious (What a combo!)

What Anil Ambani's Reliance Capital did is.. purchased a block of 14 lakh odd shares of J&K bank at Rs450/share from US-based Smallcap World Fund Inc, a part of the gigantic Capital Group of Companies of the US. This block was sold by one of Smallcap's New York fund managers to Reliance Capital. The deal was made on August 12th. 
On August 31st, however, the same ADAG led Reliance Capital sold the shares back to Smallcap at Rs600/share. This block was purchased by one of Smallcap's Singapore fund managers!

Now whether the New York and Singapore fund managers were in contact or not, is not known!
Guess ADAG firms have no complaints after making Rs 21 crore in 20 days!