Arbitary Obsessionist's Blog : Ambition is redundant. In life, mission is everything.

Archive for the ‘economy’ Category

Anna! What have you done!!

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On 27th August 2011, Baba Ramdev & BJP realised something. That calm of White is more powerful than aggression of Saffron. All it took to bring a mighty government to its knees was will of one man. And mind you, this mighty government had been elected by 1.2 billion people.

Interestingly, a World Cup triumph could not inspire Miss Pandey to live upto her promise. But Mr. Hazare’s fast made Yogitta Dandekar and Jenny to embrace tricolours in unimaginable ways. Even our very beloved Angry birds got a competition from ‘Angry Anna’.

I read it somewhere that “Anna has lit a fire. It’s for us to keep the flame of hope alive.” All the online & offline forums are busy appreciating Anna’s efforts. Anna has indeed done a repeat of RDB. Everyone is ready to light candles and sit on dharnas.

But I don’t feel that what happened, happened for the good…

Will Lokpal Bill serve its purpose of eradicating corruption? I am not sure. But what I am pretty sure of is that corruption is in our blood and it is here to stay. It’s in the very fabric of what represents our Indian society today. And just a Bill might not be sufficient.

Indian government is already facing problems of high inflation and slowing growth. But instead of focusing its effort on these issues, it is forced to deal with Anna(s). The focus is more on fire fighting and less on working towards sustainable growth and development. And this does not auger well for country. If one person can derail a duly & constitutionally elected government and make a complete mockery of the Constitutional process, then what kind of growth can we expect in such a country? Who will have faith to invest in a country which has such unstable political environment? An imperfect democracy is far better than a perfect dictatorship. The claim of Mr Hazare and his gang that they are actual representatives of Indians is not democratic but dictatorial. Indian public is much more concerned about earning its daily bread than it is about corruption. And the worst part is that even the Middle Class is finding time to get involved in these ‘disastrous’ events! And I swear that if this trend continues, all bets on India would be off. But if people, somehow do regain sense and go back to work instead of taking part in agitations, only then will the good times be ahead and not behind us.

I read it in an article that a lot of important economic issues like formation of an Indian Sovereign Wealth Fund, FDI in multi-brand retail are pending for final decision. But our government does not have the time. It has to deal with ‘our savior’ Anna.

The image in this post says it all – Anna Arrests Government.

PS –After March 2010, this is the first month when I have written more than 2 posts!


Written by Dev

August 29, 2011 at 2:47 am

Ram Naam ‘Satyam’ Hai – What a start to 2009

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All of us had put the year 2008 (Read – The year that should not be ‘named’) behind us when we welcomed 2009. After having lost more than 50% in the stocks in a year, who wouldn’t??

And just then, at the very start of the year, Mr. Raju of Satyam makes a shattering disclosure that he was fooling the entire IT industry and everyone else in the world, for the last 7 years or so! The company had almost nothing at all in bank balances and assets except its workforce of 55,000. What happened to the stock was not surprising. It lost more than 75% in a single session.


And what does Mr. Raju have to say at the end of it all –


“It was like riding a tiger, not knowing how to get off without being eaten.”


The tiger being the company, with him riding under the fear of his past misdeeds getting back to him.

An awesome analogy to say the least.


But shouldn’t we sympathize with Mr. Raju’s courage to come out and admit his mistakes? After all, it takes a lot of guts to do the same.


I don’t think so.


It is quite simple. Just the fact that a person admits to have lied for several years is reason enough for anyone to suspect that what he might be putting forward as the real truth, might just be another piece of lie!

Maybe he found this the best way to get out of the soup. Maybe there are more unpleasant surprises for all of us in store.

Mr. Raju says that he never took a single rupee for himself or his family. Now that is crap. How the hell is it possible that an IT major which has been competing with other international organizations was not profitable? How the profit margins were just 3% and not anywhere near the industrial average of 25-30%? He even went on to say that they have not sold a single share of the company for the last 8 years. But it has been made publicly known that the promoters have reduced their stake from 22% to around 7% now. So, who is lying again…you get the pattern??

We have just been around 2 weeks into the New Year and still have another 50 to go. God know what shall happen next.

Something somewhere went horribly wrong with America

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Stephen Roach, the chairman of Morgan Stanley Asia refers to the Americans as “the most over extended consumers in world history.


And he was not wrong.


  • The low interest rates in the US, gave Americans the money to keep buying stuffs that they could otherwise have never afforded. (Read LCDs, SUVs, Houses etc.) Now they borrowed against these houses to consume even more. And all the time, they never had any to pay all of it off. Because there was absolutely no rise in income.

They enjoyed their rising wealth without any rise in incomes.

Now that is what you call being stupid!


  • Fuel prices in US were too low for too long. Nothing seems wrong in this. Isn’t it? This allowed companies like GMs to continue churning out gas guzzling SUVs with little interest in developing newer and efficient cars. With easy credit available, these idiots kept on buying these cars.

Now that is what you call being blindly stupid!!


  • And to top it all, people started making money out of nowhere! Engineers and scientists joined the financial sector and gave devised “Complex & exotic (Read: Toxic)” financial instruments to make money out of money. So what is wrong? These instruments had underlying securities that had almost no value in them at all in the real sense!!

And this had to end somewhere. And what a way it did 😉

Common sense says that finance is best left to those of economics and not scientists and engineers. The latter should be involved in ‘real’ engineering rather than ‘financial’ engineering.

Now that is what you call being stupid in every sense of that word!!!


And most of us would recognize the magical cards below…


 Credit Cards - The New Weapons of Mass Destruction!!



Yeah…these are really magical!!!

You can buy anything in the world you want with these. Even if you don’t have the damn ability to pay for it.

These are the real “Weapons of Mass Destruction.

& these have actually killed the American Economy (Most probably for a really long time to come.)


Its not just simple economic meltdown that’s happening in America. It is something far more dark and serious.

The entire root system of the American TREE has been uprooted. And mind you, this cannot be put back in soil just like that. It is dead!!

Now Americans need to replant themselves with NEW seeds to economically get back to where they were.


They need the seed of saving more.


They need the seed of consuming less.


They need the seed of investing in themselves rather than the stock markets.


Yes. It is really that simple.

Credit Crisis – A Layman’s Guide

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I found this really ‘intelligent’ presentation on the ongoing credit crisis. In just 23 slides, it shows how stupid the American Financial Geniuses have been.

Credit Crisis Pictualized

View SlideShare presentation or Upload your own. (tags: presentation comic)


For knowing what really did happen in the last 5 years, which led to this current economic mess, you may read a really simple article – A step by step process of world economy destruction


Or see how a Sunday (A holiday!) changed the World Economic Map at Wall Street & US Economy destroyed


Have any questions regarding the $700,000,000,000 bailout package? Or you feel that this gigantic bailout is bad for the American taxpayers? Or you wan to know what the experts have to say about it? Read it all at $700,000,000,000


Or for a complete coverage of the current economic mayhem, read The Financial Mess


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How Rich We Are?

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Just a day or two back, my close friend and I went to have dinner in our favorite non-vegetarian hangout. Oops! I am a vegetarian; but this change from a non-veg to a veggie happened recently. And I still enjoy going there, though I only take a Coke there. But lets get back to the point. I remember that I spent around Rupees 50 (=$1) there. Pretty cheap meal, isn’t it?

Now let me remind you of a country named Ethiopia (Didn’t you know it was a country?) in Africa, which is one of the poorest countries in the world. The population of Ethiopia is around 78 million. And the average yearly income is $250.

80% of people there live on less than $1 a day.

90% of people live on less than $2 a day!

I didn’t even think twice about it as we ate our $1 dinner that night. But just think about 61 million people of Ethiopia who are living on less than the cost of my dinner?

So shouldn’t we be thankful to God for having blessed us with the riches and for having destined us to be born in a much better country? For being able to afford the things we have? We definitely should… But this should also prompt us to think about how we handle our wealth. I am not going to say that, we need to start donating all our wealth and become a DONATION TYCOON of sorts. But least we can do is be a good caretaker of the resources that have been given to us. That would be suffice.

And just while I was thinking about the list of the richest guys, I stumbled upon a really interesting website called Global Rich List… Its interesting because this site allows you to know your position in the list of world’s richest people. All you need to do is to type in your annual income and see where you rank on the Global Rich List…

Its really interesting…And about me, it says that…

I’m the 792,464,529 richest person on earth!

Discover how rich you are! >>


And to make you realize that you should think before spending, it quotes the following examples…
$8 could buy you 15 organic apples OR 25 fruit trees for farmers in Honduras to grow and sell fruit at their local market.
$30 could buy you an ER DVD Boxset OR a First Aid kit for a village in Haiti.
$73 could buy you a new mobile phone OR a new mobile health clinic to care for AIDS orphans in Uganda.
$2400 could buy you a second generation High Definition TV OR schooling for an entire generation of school children in an Angolan village.

Now I am a World’s 792,464,529th Richest Guy… So what should I do with my wealth?  🙂

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How an asset bubble builds up & what are its consequences?

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Here’s a very interesting anecdote that describes how an “asset bubble builds up and what are its consequences.”

The Bubble


Once there was a little island country. The land of this country was the tiny island itself. The total money in circulation was 2 dollar as there were only two pieces of 1 dollar coins circulating around.

1) There were 3 citizens living on this island country. A owned the land. B and C each owned 1 dollar.


2) B decided to purchase the land from A for 1 dollar. So, A and C now each own 1 dollar while B owned a piece of land that is worth 1 dollar.


3) C thought that since there is only one piece of land in the country and land is non produceable asset, its value must definitely go up. So, he borrowed 1 dollar from A and together with his own 1 dollar, he bought the land from B for 2 dollar.

A has a loan to C of 1 dollar, so his net asset is 1 dollar.

B sold his land and got 2 dollar, so his net asset is 2 dollar.

C owned the piece of land worth 2 dollar but with his 1 dollar debt to A, his net asset is 1 dollar.

The net asset of the country = 4 dollar.


4) A saw that the land he once owned has risen in value. He regretted selling it. Luckily, he has a 1 dollar loan to C. He then borrowed 2 dollar from B and and acquired the land back from C for 3 dollar. The payment is by 2 dollar cash (which he borrowed) and cancellation of the 1 dollar loan to C.

As a result, A now owned a piece of land that is worth 3 dollar. But since he owed B 2 dollar, his net asset is 1 dollar.

B loaned 2 dollar to A. So his net asset is 2 dollar.

C now has the 2 coins. His net asset is also 2 dollar.

The net asset of the country = 5 dollar. A bubble is building up.


(5) B saw that the value of land kept rising. He also wanted to own the land. So he bought the land from A for 4 dollar.

The payment is by borrowing 2 dollar from C and cancellation of his 2 dollar loan to A.

As a result, A has got his debt cleared and he got the 2 coins. His net asset is 2 dollar.

B owned a piece of land that is worth 4 dollar but since he has a debt of 2 dollar with C, his net Asset is 2 dollar.

C loaned 2 dollar to B, so his net asset is 2 dollar.

The net asset of the country = 6 dollar.

Even though, the country has only one piece of land and 2 Dollar in circulation.


(6) Everybody has made money and everybody felt happy and prosperous.


(7) One day an evil wind blowed. An evil thought came to C’s mind. “Hey, what if the land price stop going up, how could B repay my loan. There is only 2 dollar in circulation, I think after all the land that B owns is worth at most 1 dollar only.”

A also thought the same.


(8) Nobody wanted to buy land anymore. In the end, A owns the 2 dollar coins, his net asset is 2 dollar. B owed C 2 dollar and the land he owned which he thought worth 4 dollar is now 1 dollar. His net asset become –1 dollar.

C has a loan of 2 dollar to B. But it is a bad debt. Although his net asset is still 2 dollar, his Heart is palpitating.
The net asset of the country = 3 dollar again.

Who has stolen the 3 dollar from the country ?

Of course, before the bubble burst B thought his land worth 4 dollar. Actually, right before the collapse, the net asset of the country was 6 dollar in paper. his net asset is still 2 dollar, his heart is palpitating.

The net asset of the country = 3 dollar again.


(9) B had no choice but to declare bankruptcy. C as to relinquish his 2 dollar bad debt to B but in return he acquired the land which is worth 1 dollar now.

A owns the 2 coins, his net asset is 2 dollar. B is bankrupt, his net asset is 0 dollar. ( B lost everything ) C got no choice but end up with a land worth only 1 dollar (C lost one dollar) The net asset of the country = 3 dollar.

There is however a redistribution of wealth.

A is the winner, B is the loser, C is lucky that he is spared.



A few points worth noting –

  • When a bubble is building up, the debt of individual in a country to one another is also building up.
  • This story of the island is a close system whereby there is no other country and hence no foreign debt. The worth of the asset can only be calculated using the island’s own currency. Hence, there is no net loss.
  • An overdamped system is assumed when the bubble burst, meaning the land’s value did not go down to below 1 dollar.
  • When the bubble burst, the fellow with cash is the winner. The fellows having the land or extending loan to others are the loser. The asset could shrink or in worst case, they go bankrupt.
  • If there is another citizen D either holding a dollar or another piece of land but refrain to take part in the game. At the end of the day, he will neither win nor lose. But he will see the value of his money or land go up and down like a see saw..
  • When the bubble was in the growing phase, everybody made money..
  • If you are smart and know that you are living in a growing bubble, it is worthwhile to borrow money (like A ) and take part in the game. But you must know when you should change everything back to cash.
  • Instead of land, the above applies to stocks as well.
  • The actual worth of land or stocks depend largely on psychology.

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Written by Dev

October 20, 2008 at 3:16 pm

Laughing at Wall Street

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I was looking for a picture of ‘laughing’ Bernanke for this post. I couldn’t find one while searching on Google 😉 Now that’s understandable. So I used the one below (Check the top left corner of the pic and laugh more 🙂  )

Wall Street Humor

These are some of the ‘laughables’ that have been circulating on email forwards for some time now.

Q: What is the definition of optimism?
A: An investment banker ironing five shirts on a Sunday night

Q: What is the one thing Wall St and the Olympics have in common?
A: Synchronized diving

Q: What is the difference between a pigeon and a merchant banker?
A: A pigeon can still put a deposit on a Ferrari

Q: How many commodities traders does it take to change a light bulb?
A: None, they don’t change bulbs; but the trading price of darkness plummets due to oversupply

President Bush said clients shouldn’t be concerned by all these bank closings. “If the bank is closed, you just use the ATM!”

George Bush said that he is saddened to hear about the demise of Lehman brothers… His thoughts at this time go out to their mother as losing one son is hard but losing two is a tragedy.

The problem with investment bank balance sheets is that on the left side nothing is right and on the right side nothing is left.

There are 30 billion prime numbers below 700 billion. The rest are all subprime.

Why are all MBAs going back to school? To ask for their money back.

For Geography students: What’s the capital of Iceland? Answer: About Three Pounds Fifty…

A trader: “This is worse than a divorce. I’ve lost half my net worth and I still have a wife.”

What’s the difference between a guy who just lost everything in Vegas and an investment banker? A tie.

What’s the difference between a bond and a bond trader? A bond matures.

Lehman have changed their recommendation on Lehman from hold to sell. 😉

Forty years ago I sold fifty shares of my company stock and had enough money to purchase a brand-new 1967 Ford pickup. Last week, I checked it out, and if I sold another fifty shares, I’d have enough money to buy a 1967 Ford pickup. So, the market has stablised

CEO – Chief Embezzlement Officer

CFO – Corporate Fraud Officer

BULL MARKET – A random market movement causing an investor to mistake himself for a financial genius.

BEAR MARKET – A 6-18 month period when the kids get no allowance, the wife gets no jewelry, and the husband gets no sex.

VALUE INVESTING – The art of buying low and selling lower.

P/E RATIO – The percentage of investors wetting their pants as the market keeps crashing.

BROKER – What my stockbroker has made me.

STANDARD & POOR – On Wall Street, it’s “standard” for their clients to be “poor”, thus “Standard & Poor”.

STOCK ANALYST – Idiot who just downgraded your stock.

STOCK SPLIT – When your ex-wife and her lawyer split your assets equally between themselves.

FINANCIAL PLANNER – A guy whose phone has been disconnected.

MARKET CORRECTION – The day after you buy stocks. 😉

INSTITUTIONAL INVESTOR — Past year investor who’s now locked up in a nuthouse.

PROFIT — An ancient word no longer in use.

CAPITALISM — What Republicans said wanted before they got hit by losses and embraced the Socialistic “bailout”.

MOMENTUM INVESTING – The fine art of buying high and selling low

‘BUY, BUY’ – A flight attendant making market recommendations as you step off the plane

WARREN BUFFET – Where God goes for a loan 😉

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