Thursday, October 16, 2008

Wednesday, October 08, 2008

At a coffee bar...

You know those upmarket coffee shops, yeah yeah now there are dime a dozen and possibly are not so upmarket anymore, I am a part of that. We have watched the nation grow over the last 5 years, I myself have seen two upgrades to better styling and design. For a country that devours tea/coffee at home so religiously, its not a surprise that we took very easily to the coffee bar, but why people pay such silly prices beats me. But then I am just a piece of furniture, humans must be very intelligent.

I do come across a variety of people, some who sit on me almost as if they are embarrassed about hurting me, some sit very heavily, some sit on the edge, some make me balance on my hind legs (yeah that's how a sob broke one of my beautiful legs ). The habits are more varied, some stupid idiot always insists on violating me by sticking his gum on me (thank god for the cleaning boy) or some overworked desk eater will want to bore holes through me by rocket farting. A couple holding their hands melts me more often than not (yup, they say I am too soft), chattering college kids (of the female variety) who can chat about anything on the planet and get on your nerves, yap yap yap. Then there are the creeps who keep bending down to get a glimpse of the legs that are shown around more often than not these days (don't laugh, first when they used to bend down I thought they wanted to admire me you know, I am I not much more beautiful than the girl there?). You can easily judge most people who come here. But then I am just a piece of furniture, humans must be very intelligent.

You should listen to some of the converations - my comments in italics:

Hottest topic these days "Markets are falling man, hamara sara paisa doob gaya. Mera bhains bhag gaya, I mean the bull markets have run away" (Humans dont understand risk? Or do they only like to crib in general?)

"Those muslims man, they should be thrown out of the country" (The mistake of making comments simply because one has the security of a majority)

Lets remake Starwars in Hindi, we shall also add Harry met Sally --- arre nahi thats already been done, ok we will add 12 monkeys to it no no Ajay Devgan nahin baba we dont want the 13th monkey do we? We need a bit of a crying and a bit of reality too... lets combine inconvenient truth and a bit of Lorenzo s Oil. Will it be atleast slightly better than Drona?" (From what I hear, anything will be better than Drona)

You dont trust me, how much do you love me, baby (and other cute names), what were you talking to the that girl/guy about, what are you buying me for my birthday, when are we getting married, remove that hand now, what should i wear for the party-lets buy something-nothing is fitting-its your fault-you dont like me" (Recursive - yup among all couples)

"Sachin should retire, the board should bring back Ganguly, the left is right this time, congress is wrong, Sanjay should get married, India should blast more bombs, you should sell i mean buy i mean sell right now, that bank is collapsing, that guy is a fraud - the world is corrupt, too much poverty in India I say, we should show China its place, India should innovate more, Society should have more culture in it, filmstars shouldnt expose more, India should do no human rights violations, we need more less infrequent frequent regulations ...helpe me" ( Armchair experts)

I guess I am being to sarcastic, humans must be knowing what they are doing, after all they created me (or did matter just flow onto iitself). I am just a piece of furniture, a chair in a coffee bar. Next time you are having coffee you may be sitting on me.

Credit Squeeze - India story

The whole of last 2 weeks there have been repeated rumours of banks collapsing, restriction in trading amongst banks and now finally we hear that banks have stopped lending to each other. No indicator can really prove this because the inter bank rate would be on recorded transactions, whereas if there are no trades there is no price.

I generally believe that the Indian Banking system is sound, mostly becase of tardiness and regulation rather than anything else, but I would to know what is happening to those currency hedges sold at USD/INR at 40? Do any of the banks have an exposure on this?

Every body is sitting tight on liquidity right now and will wait for the tide to pass. Whats the best thing to do?

1) Put money into FDs, post tax 7-8% is not bad eh?
2) Buy physical gold - it cant get stolen you see
3) Go on a holiday, your money will anyway buy you more today.
4) Stay in cash as yet

Q 2 earnings, holy mother of god.. now thats coming. Consider this compared to last year;

Rupee: Down an average 10%
Interest rates: Up an average 2-5%
Commodity (over the last quarter): Up 2-5%
Wages (the wage hikes would have become effective towards end of 1 Q and continued in Q2) - 5%

Prepare for the earnings moderation ahead.

Seems like a buy signal doesnt it ? Sure does, but might as well wait for a bit of stability, you are not retiring in 2 months are you?

Fed Fails to calm the markets

How has the Fed handled the crisis?
1) Very poor
2) Pathetic
3) What were they thinking?
4) Save me from the FED

Sylvester Stallone would have done a better job, Rocky for Chairman of Fed Reserve. Should the best response would have been to wait and watch and continue the inflation targetting, which is what central banks have been doing from the Freidman era? or will the interventionist policy save the day.

I would still take a view that the Fed would have been best served by not really getting involved with any of the individual players. What they should have purely done is that guaranteed all deposits, investors can lose as much money as they want but the depositors losing money will send the economy into a tailspin. Fed was to be the bailout mechanism of the last resort, the continuing freeze in the credit markets essentially proves that the Fed has failed and that it cannot restore faith in the markets. (The Fed was held responsible even during the Great Depression).

Now the Fed will play the Keynes Quote "The markets can remain irrational longer than the rational investor can remain solvent", Fed is buying up all the assets and if that it not working, it is frightening to say the least. Of oucrse the Fed really couldnt be blamed if every stupid bank in the entire developed world bought the same stupid assets and shoved it up their (now the Feds ) ass can it?

And how much did the shorts ban contribute to financials fall yesterday?