This is the first post in seven months, I never meant to take this big a break from blogger ever, but then can you plan everything? any ways, for now the blog is alive. Since the last write-up in sometime October, there has been some pretty dramatic events that have happened that I used to blog about regularly. More detailed insights will be coming in the later posts that delve into them in detail.
- first, is the spectacular and the gigantic unwinding of the massive securities leveraging that has been built over the years in derivatives market. The net result has been that world financial markets has become one big vacuum that was sucking all real money to cover up losses in betting on notional money markets causing the money supply to dry and lead the world into recession. The visible result is that American corporate landscape has changed, and changed for ever. post-Detroit, post-Big Banks, the shine is off of corporate America.
- second, is the increasing grip of Taliban that is gnawing at the periphery in the neighbouring Pakistan. Add to this the 29-11 outrage, I think the day of reckoning has come for Islamabad. If you have lost control of places within 100 miles of capital (Swat, Buner), then I don't know what else is Pakistani military leadership is waiting for. I mean, can it go more dire, it does not take 100% support to conquer 100% of country. Only 10% can intimidate the rest 90% in submission. Indian Kashmir seems to be pretty much next on the cross hairs.
- thirdly, the Indian election, for not what was elected, but for what was rejected. regionalism is out, so is caste driven, religion driven politics. This election will be the first after 1989-mandal infused environs, where caste based politics was put on the back burner and development has been brought to fore. Equally inspiring is the revival of national parties and break from regionalism. Also the lack of communists can make sure that economic reforms can move forward especially in banking, pension and labour markets.
- lastly, the US election, that brought President Obama to the White House, what matters is not the party, but the style of functioning that he bring to office. The world needs some serious leadership in areas like renewable energy, financial regulation, curbing protectionism barriers, stem cell research, global warming and rising tide of militant Islam. I hope this president brings new approaches to these intricate issues, as we are already starting eight years late.
Showing posts with label stock market. Show all posts
Showing posts with label stock market. Show all posts
2008 American Credit Crisis
Thou' speak when the damage is already done. Alan Greenspan & his take on the deepening credit crisis
The news is getting increasingly ominous here, some are already hinting that this crisis in american financial markets could easily be the most gravest since the great depression, I am no expert on such a fancy subject but even the talk of comparing these two events makes you realize that things are maybe unravelling a bit too too fast. Maybe its all hoax, but then how could a company like Bear Stearn's be worth 2 bucks a piece just in matter of a fortnight. Being devalued 99% in fifteen days is something. There is more to it then meets the normal eye, and the way fed intervened [ Remember when satara-based UWB, that was sold lock,stock & barrel in three days by RBI ] to save it from going under suggests that its failure is maybe incomprehensible and could trigger a cascading set of failures. It means that there are other pressure points in the system that are under a lot of strain & are possibly waiting to rupture. I am surprised by the inherent flaws that this 'small' credit crunch has exposed in the glitzy american financial markets and its domino effect around the world. The seemingly hard and tinted glass building hides a lot of skeletons inside.
Its the return of the Karma in the financial markets these days, finally we are seeing that gigantic de-leverage-ing of the entire financial muddle that has been created over the years. Frankly, do we need so many financial instruments just to manage risk? All this risk based default swaps, where the risk can be quantified. It's good that some sanity is getting back into the system, but at a heavy cost. Somehow, how did not anybody saw this coming, how come those blue-blooded analysts were caught unaware. Over the years, Greenspan's low interest rate regime boomed these fancy paper and the housing market. Caution was the first thing that everybody threw to the winds, I guess if you keep good times for too long, then complacency sets in. But then some day the cookie had to crumble, and look the way it crumbled.
The news is getting increasingly ominous here, some are already hinting that this crisis in american financial markets could easily be the most gravest since the great depression, I am no expert on such a fancy subject but even the talk of comparing these two events makes you realize that things are maybe unravelling a bit too too fast. Maybe its all hoax, but then how could a company like Bear Stearn's be worth 2 bucks a piece just in matter of a fortnight. Being devalued 99% in fifteen days is something. There is more to it then meets the normal eye, and the way fed intervened [ Remember when satara-based UWB, that was sold lock,stock & barrel in three days by RBI ] to save it from going under suggests that its failure is maybe incomprehensible and could trigger a cascading set of failures. It means that there are other pressure points in the system that are under a lot of strain & are possibly waiting to rupture. I am surprised by the inherent flaws that this 'small' credit crunch has exposed in the glitzy american financial markets and its domino effect around the world. The seemingly hard and tinted glass building hides a lot of skeletons inside.
Its the return of the Karma in the financial markets these days, finally we are seeing that gigantic de-leverage-ing of the entire financial muddle that has been created over the years. Frankly, do we need so many financial instruments just to manage risk? All this risk based default swaps, where the risk can be quantified. It's good that some sanity is getting back into the system, but at a heavy cost. Somehow, how did not anybody saw this coming, how come those blue-blooded analysts were caught unaware. Over the years, Greenspan's low interest rate regime boomed these fancy paper and the housing market. Caution was the first thing that everybody threw to the winds, I guess if you keep good times for too long, then complacency sets in. But then some day the cookie had to crumble, and look the way it crumbled.
2008 Crisis : My Take On Coming Full Circle
Yesterday it was Carlyle capital, today its Bears Sterns & Co and rumors are hot that Lehman Brothers is also in a bit of trouble. The story keeps getting better or morbid whatever way you call it. Are there any lessons to be learned from so much deadwood floating around. Yes, Obviously for one greed is bad, it always has been bad, two convenience (i am not sure if its the right word) is not always such a good thing, making it possible for sub prime credit rating people to own homes was not probably the brightest of ideas. Attempting to build castles that has its foundations of sand is always a risky proposition, but then greed took care of pragmatism. Third, such moderation is maybe good or even necessary every decade to remove the complacency that builds up into the system. Fourth, this recession could lead to cooling of commodity prices worldwide that have been on the roll for quite some time now, last seen Brent was at $111 a barrel, I can still recall when the basket was ruling at sub-10 levels (around 1997). Every central bank worldwide is having a tightrope to walk between recession & inflation and Last this could be a clarion call to the US that its no longer the centre of the economic & industrial activity that it had been till now, the balance of power has started to move towards Asia and US can not continue hoping that it can be the richest borrower for all its life and not keep its own house in order.
Are there any lessons to be learned from this for India, Yes, one there is nothing like decoupling, we will not go into negative growth, but yes we will feel the pain,see ICICI Bank sub prime write-offs. second, avoid excesses in investments of any kind as you could be holding on to an assets for a long amount of time as market moves possibly sideways. Third, the India growth story is intact but the exuberance could wear of a little, so no more of hefty jumps on job hopping, Fourth growth would now have to be created as world economy has slowed, earlier we were on a gravy train that built the our growth rate with its own momentum, no since the train is de-accelerating India must push its engine harder to keep the train going faster. To take growth to the next level we needs reforms, solid reforms & with the election just around the corner, I am not putting my buck on reforms.
Are there any lessons to be learned from this for India, Yes, one there is nothing like decoupling, we will not go into negative growth, but yes we will feel the pain,see ICICI Bank sub prime write-offs. second, avoid excesses in investments of any kind as you could be holding on to an assets for a long amount of time as market moves possibly sideways. Third, the India growth story is intact but the exuberance could wear of a little, so no more of hefty jumps on job hopping, Fourth growth would now have to be created as world economy has slowed, earlier we were on a gravy train that built the our growth rate with its own momentum, no since the train is de-accelerating India must push its engine harder to keep the train going faster. To take growth to the next level we needs reforms, solid reforms & with the election just around the corner, I am not putting my buck on reforms.
Stock Market's Nervous Breakdown
How can I have not guessed it, damn it. this turn of events in the stock market have taken even die hard market watchers literally with their pants down. Even I am, among the millions of so called small investor that have seen there investment go down week after week for last six weeks now. and you know what, I have stopped opening my demat account now , but should we be complaining as such?
Haven't we lost the right to complain about the precipitous fall when the rise of the markets was itself dubious. I have no problem with that, I have no problem in losing money when things crash, provided I had gained profit when the market was scaling high day after day. That's where the problem is, I invested in quality stocks that rose hardly in last couple of months of the bull market but have retraced a lot more when the chips were down. Bad sentiment I guess, has no reason, panic has no mind of its own, all it has is a momentum of its own. And still some people have the guts to come on TV day after day, saying that this support level would hold & we have bottomed out, that too when there were no more fundamental reasons for it to fall as there were for its heady ascent.
The bubble had to burst, the sorry part was that I was part of this circus, where no amount of smart investing works, hope this carnage ends fast, for its hurting now.
Haven't we lost the right to complain about the precipitous fall when the rise of the markets was itself dubious. I have no problem with that, I have no problem in losing money when things crash, provided I had gained profit when the market was scaling high day after day. That's where the problem is, I invested in quality stocks that rose hardly in last couple of months of the bull market but have retraced a lot more when the chips were down. Bad sentiment I guess, has no reason, panic has no mind of its own, all it has is a momentum of its own. And still some people have the guts to come on TV day after day, saying that this support level would hold & we have bottomed out, that too when there were no more fundamental reasons for it to fall as there were for its heady ascent.
The bubble had to burst, the sorry part was that I was part of this circus, where no amount of smart investing works, hope this carnage ends fast, for its hurting now.
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