A load of crap from an idle brain

Bill Bonner of the Daily Reckoning has for long had a bone to pick with Thomas Friedman of the New York Times. It all first started with legendary short seller James Chanos calling China “Dubai times 1,000 – or worse.” To which Thomas Friedman wrote that James Chanos should be careful about trying to “short a country that has $2 trillion in cash” in this article titled “Is China the next Enron?”

Thomas Friedman & Bill Bonner

In his article, The Long and Short of China, Bonner goes hammer and tongs at Thomas Friedman saying…

Oh happy days are here again. Obama is going to get our money back from the banks. Jeffrey Sachs is telling Haiti how it can get its economy back in order (with other people’s money, naturally). And Thomas Friedman is offering investment advice.

This should be fun. We’re all on the bus…and it’s driven by the blind, the deaf and the very dumb. Oh, sorry, we meant the visually impaired…the hearing impaired…and the mentally deficient.

Friedman is, as we all know, full of advice on just about everything. He advises finance ministers on how to soup-up their economies. He advises the Arab world on how to update its religious institutions. He advises whole nations on how to improve the future before it happens.

And here he is now counseling Mr. James Chanos, noted short seller, on how to make money

Big egos are at play here.  But its not to discount the value of the words being spoken here.  Bill Bonner, Thomas Friedman and James Chanos are all good at what they do.  They have built up a career full of backing their claims with the work they have done.

Last word on whether China is a bubble or not is yet to be spoken.  Meanwhile, Thomas Friedman finds another supporter in Keith Fitz-Gerald of Money Morning.

Above pictures courtesy: Theteemingbrain, Cityfile & Stockopedia

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India’s gold obsession never ends

At a conservative estimate of 15,000 tonnes, India’s privately held gold reserves, at present prices, are valued at $550 billion – nearly 40 per cent of India’s stock market capitalisation of $ 1.4 trillion, reveals a report from HDFC Securities. India’s net retail investment in gold has also doubled from 90 tonnes to 200 tonnes over 2003-08 and is now a $7 billion market. HDFC Securities analyst Anupam Gupta expects that a 1 per cent shift in savings from bank deposits to gold can add 4 per cent to India’s annual gold demand.

India’s obsession with gold is well known. Accumulated over generations, India’s privately held gold reserves are estimated at 15,000 to 25,000 tonnes. At present prices, this is valued at $548-913 billion and can act as a potent driver to sustain the wealth effect in India. While jewellery remains the dominant mode of possessing gold, India’s net retail investment doubled to 200 tonnes in 2008 from 90 tonnes in 2003, reflecting a marked shift in consumer attitude towards gold as an asset, the report said

Another way to look at gold ownership in India is to compare it to annual savings patterns. Indians purchased 660 tonnes, or $19 billion, of gold in 2008, which formed an approximate 15 per cent of physical savings and 5 per cent of total savings. “This implies enough headroom for growth because attitude toward gold ownership changes from jewellery to investment. As attitudes change, we expect Indians to open up to the idea of owning gold as an investment, rather than an asset,” Gupta said.

Gold loans also present a huge opportunity. Even if banks tap 5 per cent of average private gold reserves of 20,000 tonnes, this translates to a market size of $37 billion, Gupta said. Banks and non-banking financial companies (NBFCs), such as Manappuram General Finance and Muthoot Finance are expanding their network to tap into this fast-growing and underserviced market.

News source: MydigitalFC

Picture source: CometoIndia

Previous articles on Gold & India
RBI buys 200 tonnes of gold from IMF
Joy Alukkas to open world’s biggest jewellery shop in Chennai

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Was it expected?  Well, it depends on the people you are asking.  If you ask the rulers of the kingdom, then everything is and was hunky dory.  If you ask the economists and people tracking the business of Dubai, it was always sitting on a debt bubble, ever willing to burst.

The tallest building, the biggest man made island, the biggest snow world in the midst of a desert, the largest mall in the world, the glitziest and grandest hotels in the world…the list of biggest, largest, tallest was never enough for Dubai to conquer.  And in this context, the tiny city state of Dubai over leveraged itself and built an empire of debt.  A debt that is bigger than its GDP now.

For a country that hardly has any oil, it had to build its future on something else than oil.  So, the charismatic ruler of Dubai, Sheik Mohammed bin Rashid Al-Maktoum decided to move to finance, tourism to hedge its economy.  Good vision no doubt, but its the execution where the fault lay.  Mindless borrowing was fun and fine till the economic collapse happened in the USA.  With the collapse of Lehman, Merrill Lynch and a host of big banks, the easy money dried up.  And it was just a matter of time before which this was to happen.

Just three days before Eid, the Dubai government’s announced a six-month reprieve on debt repayments. This  sent shockwaves through the world markets, as it raised doubts over the Gulf emirate’s ability to meet its financial obligations.

Dubai is being crushed under a mountain of debt. The emirate has a debt in excess of $80 billion which it incurred by expanding in banking, real estate and transportation. Dubai World with $60 billion liabilities has sought a six-month standstill on its debt repayment to all its lenders.

The Dubai government requested the creditors of Dubai World (one of three conglomerates that are backed by the emirate), to agree to a ‘standstill’ on repayments until May 30 2010.

On one hand the Finance ministers and bankers are saying that the markets are behaving erratically.  But believe them at their own peril.  These are the same people who just days before the collapse of the American banks proclaimed that all was well.

For most of this decade Dubai has been the Victoria Beckham of the Arab world–the biggest, glitziest, most heedless spender. It’s been the sort of place that invests $7.6 billion subway system few of its 1.6 million people are likely to use, the sort of place that builds artificial islands in the shape of palm trees, the sort of place that builds the world’s tallest skyscraper, the sort of place that sells designer seat-belts to encourage drivers to be safer in the very cars it wants them to trade in for a subway ride, and the sort of place where office buildings have been the Gulf’s most copious crop of the decade.

Dubai hasn’t limited its excesses to its corner of the United Arab Emirates. Through Dubai World, the Emirate’s investment arm, it partnered with MGM Mirage and invested in such projects as Las Vegas’ City Center, a 67-acre development that includes a 4,004-room hotel-casino, 2,400 high-rise residential condos, dining and entertainment venues and its own retail district. At $8.5 billion, it’s the most expensive privately financed construction project in the United States.

Now the bad news.

The Dubai subway has been running since September, albeit to empty quarters. A quarter of Dubai’s office space is vacant. Workers have taken salary cuts of up to 30%. The Emirati government is in debt to the tune of $80 billion to $120 billion. CityCenter? It’s “worth about half of what it cost MGM Mirage and Dubai World to build the massive Strip development,” the Las Vegas Review-Journal reported in October. lost half its value. MGM Mirage took a $1 billion write-down already, Dubai World ate a $348 million loss (so far).

Read rest of the article here

So, does that mean that the Dubai dream is all over?  Not really.  Am sure the more conservative cousin of Dubai, Abu Dhabi will come in with its oil money to rescue it.  But Abu Dhabi has conveyed that the help will on a case to case basis.

That would mean that we would see lesser flamboyance from everyone associated with Dubai, at least for some time now.

More articles on the Dubai mayhem

Recession and debt dissolve Dubai’s mirage in the desert
Dubai’s Debt Troubles: Beginning of the Next Leg Down?
Dubai: an emirate in crisis
Sober ruler of Dubai whose vision is crumbling in the face of the storm

Eventhough the government has been harping that inflation has dipped into negative levels, does it mean that the prices of all essential goods have gone down?  Vegetables still cost high, fuel prices are still high, housing and rentals are still beyond the reach of the common man.  What is the data based on which the government claims that the inflation has been steadily decreasing ever since it reached double figures around 6 months ago?

This is because the Indian government is one of the very few governments in the world that calculates inflation based on Wholesale Price Index (WPI) and not Consumer Price Index (CPI) as the rest of the world does.

According to Wikipedia, Wholesale Price Index (WPI) is the price of a representative basket of wholesale goods. Some countries (like India and The Philippines) use WPI changes as a central measure of inflation.

Whereas, Consumer Price Index (CPI) is a measure of the average price of consumer goods and services purchased by households.

This is the reason why inspite of the govt’s claims that the inflation has entered negative territory, you dont see any decrease in the prices of goods when you go shopping. The figures that the govt trots out is wholesale prices.  The common finds no relief as the reduction in the wholesale prices take a long time to trickle down to his level.

According to the Reserve Bank of India website, CPI at the All-India level as on 11 June 2009 is 4.63%.  Anything else that the government tells you is simply hogwash.

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Our fake ‘Iron Man’ and the eternal Prime Minister in waiting, LK Advani has fallen for a simple internet hoax.  Ya, the same kind of hoax mails that propagate that 30% of all Indians populate NASA, that 25% of all Microsoft employees are Indians etc..

Read Manish’s post as he busts the hoax that is popularly going round on the internet mentioning that almost US$ 5.7 trillion of Indian cash is being hoarded in Swiss banks and that he will bring them back to India.

Self-appointed Prime Minister Lal Krishna Advani apparently is too excited about the Internet.  He suddenly is receiving chain mails like all of us – and has decided the government policy should be decided based on these email forwards.

Mr.Advani now wants all black money stashed away in Swiss banks by Indians brought back. And he promises to do that if he comes to power. Well,  how a man who couldn’t negotiate a few hijackers – will arm-twist Swiss bankers is beyond me.

Read the rest of the post here.

We have such morons staking claims for the next PM’s gaddi.  I have always believed that leaving the Prime Minister’s reigns in the hands of a communal Advani (the one responsible for all the communal blood letting in India with his rath yatras) is foolhardy.  And now, with these comments, the belief that he is not only communal, but also a nutcase is only confirmed.

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Reliance Industries Ltd’s new refinery in western Gujarat state began processing crude this week, nearly doubling company output and creating the world’s biggest refining complex just as global demand retreats.

After reaching full capacity of 580,000 barrels per day (bpd), the $6 billion project, one of the most sophisticated in the world, will make the oil complex in Jamnagar the single-biggest supplier of fuels to the global market. It will pump out 1.24 million bpd of ultra-clean fuels to meet demand in Europe, Africa and the United States.

The refiner’s process configuration is being designed to maximise gasoline, alkylate, jet fuel and diesel output, as well as premium products such as 0.1 percent sulphur gasoline and diesel, while the production of residual fuel will be limited.

RPL refinery at a glance

• It is one of the world’s most complex refineries with a Nelson Complexity index of 14.0. This will enable the refinery to process heavy-crude varieties and produce superior quality products that meet stringent specifications, even beyond the forthcoming Euro IV norms.

• The high complexity will also present a significant competitive advantage in the current industry landscape of increasingly heavy and sour new crude discoveries. In addition, the widening light-heavy differentials in recent years will add to its competitiveness.

• RPL refinery is located adjacent to RIL’s existing refinery and petrochemicals complex, which is among the largest and most efficient complexes in the world. Through sharing of best practices and leveraging the existing infrastructure, RPL will stand to gain in the areas of operational efficiency, logistics, crude sourcing, product placement and risk management

• Close proximity to the Middle East. The result: lower ship turnaround time and reduced crude freight costs.

Above news source: Reuters UK & Indian Express

Pictures source: Reliance Petroleum website

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I want to finish the following exams, if possible, in the next 2 years

IBM Lotus 8 Systems Administration Certifcation – 4 papers

IBM Lotus Notes Domino 8 System Administration Operating Fundamentals
IBM Lotus Notes Domino 8 Building the Infrastructure
IBM Lotus Notes Domino 8 Managing Servers and Users
IBM Lotus Notes Domino 8 Configuring Domino Web Servers

Microsoft Windows 2008 Server Certification – 4 papers

Windows 2008 Active Directory Configuration
Windows 2008 Network Infrastructure Configuration
Windows 2008 Configuring Applications Infrastructure
Windows 2008 Windows Server Administration
Windows 2008 Enterprise Administrator

NCFM exams – 4 papers

Capital Markets
Mutual Funds
Commodities Market
Derivatives Market

Certified Financial Planner (CFP)

Wonder where will i find the motivation, money and time to finish all the exams ?

Above picture courtesy: Gailsussmanmiller

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This surely has to be the most closely guarded and shocking news in the industry this year. The Singhs have really stuck gold with this deal. A lot of the money generated out this deal will be pumped into Fortis Healthcare and Religare Financial Services. Only time will tell if Malvinder Singh has pulled off a coup or it’s a decision he will live to regret.

The Indian promoters of Ranbaxy, the Singh family, have agreed to sell their stake to Daiichi Sankyo Company Ltd of Japan in one of the largest deals in the Indian pharmaceutical space.

The all-cash deal is valued at $4.6 billion (Rs 19,780 crore) which will see Daiichi acquiring 51 per cent in Ranbaxy, India’s largest domestic drug company, at Rs 737 a share, a 53.5 per cent premium to the average daily closing price on the National Stock Exchange for three months ending June 10, 2008, and 31.4 per cent to the June 10 closing price.

This price puts Ranbaxy’s enterprise value at $8.5 billion.

Full article here

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