Work has been too tough and nerve wracking ever since i moved into the new department more than 5 months ago (ya, time flies), not to mention colleagues who are of no use to the team but somehow manage to survive at work inspite of doing nothing productive. Ya, life is a big bunch of surprises.  The ones who work are questioned when there is a lapse on their end, but some people just laze around at work and unashamedly take the salary at the end of the month and no one even bats an eyelid.

Anyways, over a period of time have steeled myself to ignore such characters and sideline them.  There are others who are enthusiastic about work and they are the ones who really encourage me to look forward to going back to work daily.

But this week off was a much needed one.  Have been doing nothing but having good home cooked food, having my regular post lunch naps, wandering aimlessly around the city, reading books on the couch and most importantly watching the financial markets melt the world over.  Watching this self inflicted wound by the US not only to itself but criminally exporting its problems to the worldwide economies is simply mind boggling to watch.  Not to mention morons like Alan Greenspan openly bragging that this debt ceiling is of no issue to the US as they can print as much dollars they want.  Now beat that.

The funniest part of the whole debt problem is the reaction from China which blasted the US for its uninhibited funding of its consumerism by debt.  But why is China so worried about the debt downgrade of the US from AAA to AA+ by S&P ?  Its because China holds more than a trillion dollars worth of US debt.  The more irony comes from the fact that just a few months ago, some so-called Chinese thinkers were threatening to dump dollars that China is holding in the form of its foreign reserves to show who the boss is.  Which makes one wonder, if China dumps the dollar, which moron in the world wants to buy it?  And if it dumps the dollar and the value of the dollar takes a nosedive further eroding the value of the reserves its holding, who is China threatening in the first place?  Its like cutting the nose to spite the face.  The whole fracas reminds me of the saying that i had posted sometime earlier in this blog….

“If you owe the bank $100 that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.” – J Paul Getty

China today finds itself between the devil and the deep sea.  On one hand it needs to keep the yuan weaker by buying up all the dollars else the export oriented economy that China has carefully built up over the decades will collapse.  With thousands of riots happening countrywide, the Communist government doesn’t want another disaster on its hands.

And its not easy to make a complete turnaround of the economy from an exporting one to a local consumer led economy.  The transition takes years to happen. So, it keeps buying up dollars to keep its own currency cheaper and with the US dollar collapsing to newer lows, everyone is at their wits end trying to hold things together.

So, what to do now?  Nothing much..if you have money sit tight or start buying into blue chips in small tranches.  For the ones who sold off their equity holdings a few months earlier, i have nothing but admiration for your foresight.  For those who plan to sell during the collapse now, there is nothing more foolish decision than that.

Gold is scaling new heights daily as the US dollar loses its value.  Its gonna be a turbulent few months ahead.  Sit tight, there is much more trouble ahead.  Like the Oracle of Omaha, Warren Buffett once said…

“Its only when the tide goes out that you learn who has been swimming naked”

Pictures courtesy: Now Public, Guardian, wmpoweruser

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My dad introduced me to the blue box of Nivea when i was in school.  3 decades later, i still use it.  Not only do i use their moisturizer, but body cream, chap stick and not to mention Nivea face wash. I love their soap too and wish that they come out with a shower soap soon so that i can use that.  Iam a complete Nivea person.

The other company IBM is considered the grandfather of computing.  Go here to see the wonderful site of IBM chronicling the 100 years of its history.  Some of the best innovations that have come out from the company, the website is a must read.

Laptops, PCs, Mainframes, Supercomputers, Messaging software, Webservers, Artificial Intelligence, Routing, Switching, Backend…you name it, IBM does it.

For many people believe that IBM is a pure IT company.  Not true. go to this website to read about the super work it does in the field of Biotechnology, Medicine, Space, Sports, Chemistry, Mathematics etc.

I started off my career working on IBM software, Lotus etc.  After having worked on competing products, you have to admit that there is something about the things that IBM makes that make them tick.  Afterall, to clock $100 billion revenues per year is no small feat.  At a time when companies with barely any revenue are quoted at 100 odd P/E on the stock markets, IBM’s stock is at a rock solid US$ 170 with a P/E ratio of about 14.

Here’s wishing many more decades of success for both companies.

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Kumar’s symbol (on the left) is an amalgam of the Devanagari ‘Ra’ and the Roman capital ‘R’ without the stem, very much in line with what Finance Minister Pranab Mukherjee had envisioned. “We intend to formalise a symbol for the Indian rupee which reflects and captures Indian ethos and culture,” Mukherjee said in his Budget speech this year.

The chosen symbol has the Finance Minister’s approval, said a Ministry official.

The Ministry had organised a symbol design competition with a prize money of Rs 2.5 lakh with the condition that it should be applicable to the standard keyboard, be in the national language script or a visual representation and should represent the historical and cultural ethos of the country.

Full news here

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The authors of this book are Bill Bonner & Addison Wiggin who have been writing the free daily newsletter, The Daily Reckoning for more than 10 years now. The newsletter covers a lot about the daily economy, world politics, investment strategies, gold, stock market etc.  Bonner is also the founder and president of Agora Publishing.

The authors believe that the America of today has left the values of its founding fathers far behind and has become an imperial power instead of being a country.  Bonner also believes that the end of America is also coming soon.  The author talks about the dollar crisis, the coming end of the US economy. He writes about how successive US governments have gone to war and wasted all resources, the decoupling of the dollar to the gold standard, the federal reserve under Alan Greenspan with his inflationary policies totally wrecked the US economy.

Quoting from Amazon,

Bonner and Wiggin view ancient Rome as the classical model of empire. Running an empire was an expensive business; the folks in the homeland needed to be mollified with government handouts (bread and circuses), while a large military had to be maintained in the frontier. Rome used its military power to exact tribute from neighboring states; it was a protection racket, no different from the Mafia. Nevertheless, this scheme generally kept the central state solvent and the territories at peace. The United States is also an empire, Bonner and Wiggin maintain, but it does not follow the classical model. It placates its citizens with massive distributions of government largess while using its powerful military to exert influence and keep peace abroad. However, “[i]nstead of getting paid for providing protection, the United States is on the receiving end of loans from its tributary states and trading partners ” (p. 77). This is how the United States became the Empire of Debt.

Empire of Debt: The Rise of an Epic Financial Crisis
Authors – Bill Bonner & Addison Wiggin
Pages – 384
Publisher – Wiley

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The GDP growth rate had slowed to 6.7% in 2008-09 following the global economic crisis, after topping 9% in the previous three years. On Monday, finance minister Pranab Mukherjee reiterated his confidence that the economy would grow at 8.5%-plus in 2010-11.

Finance secretary Ashok Chawla also pegged economic growth at 8.5% in 2010-11. “The growth numbers are pleasant but not really surprising, because we were expecting them to be robust which they turned out to be. This clearly indicates the momentum which is in the economy and the expectations that the 8.5% estimation for 2010-11 is going to be a clear possibility,” he said.

Full article here

Above picture courtesy: Moneymint

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Bank of Rajasthan, one of the oldest private sector banks in the country, on Tuesday announced that it would merge with the largest private sector bank, ICICI Bank.

The board of ICICI Bank, which met later in the day, also agreed to give in-principle approval for merger of Bank of Rajasthan with it “subject to due diligence and valuation by an independent valuer jointly appointed by both banks.”

“The board will consider the due diligence report and the valuation report at a subsequent meeting. The proposal if approved by the boards of ICICI Bank and Bank of Rajasthan would then be placed before the shareholders of both banks for approval and would be submitted to the Reserve Bank of India (RBI) for its consideration,” ICICI Bank stated after its board meeting here.

Full article here

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“There is a drop both in the number and the quality of Ph.D. applications, more noticeably in the last two years.” says Anand Sivasubramaniam, professor of computer science and engineering, Pennsylvania State University (Penn State). “This year, of the more than 700 applications we received from prospective graduate students worldwide, the number of applications from top Indian institutes such as the IITs and IISc was in the single digit. Less than three years ago, this number was in the double digits,” he says. An article this February in The Chronicle of Higher Education reported a 50 percent decline in the number of new Indian graduate students this Autumn at the University of Georgia. The computer science department at California State University (Long Beach) saw a spate of prospective master’s students from India abandoning their application process midway.

“It’s the beginning of a trend, an indicator that something is happening and that Indian students are not coming here like they did in the past,” laments Dr. Nathan Bell, director of research at the Council.
You don’t have to look far to find the reasons for this. With the US economy in a shambles, there are severe budget cuts at state-funded universities. The prospects of obtaining a full waiver of tuition fees are slim. Dwindling grant money also means that local students stand a better chance of getting a research fellowship than foreign students. So, many Indian students end up working for free. Last semester, Atulya Prasad, a master’s and Ph.D. candidate in biomedical engineering at New York’s Stony Brook University, worked as a research assistant sans the stipend.

The situation doesn’t improve upon graduation. The growing political backlash against the loss of American jobs, and the rising anti-immigrant sentiment means that getting a work visa — let alone getting a job — is as tough as it can get. So much so that now, even the lure of a US-located son-in-law is starting to fade. “The classic America-educated son-in-law syndrome is almost nonexistent as students, especially from tier 2 schools, hardly get jobs in the US after they graduate,” says Satyavrata Samavedi, a Ph.D. candidate in tissue engineering at the Virginia Institute of Technology (Virginia Tech).

Full article here

Above picture courtesy: Associated Content

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And the infrastructure push just for the next one year is $140 billion (approx 7 lakh crores). Once in the lifetime of the growth of a country you can see such an explosive growth.  If you can identify the correct companies and make investments, it will give you the kind of returns which you would have never imagined.

India is roaring towards an infrastructure boom and plenty of jobs will be created like never before as capital expenditure in the next financial year is expected to surge up to a whopping Rs 700,000 crore or about 10 per cent of the expected gross domestic product of about Rs 70,00,000 crore. Companies in auto, power, railways, irrigation, airports and ports sectors are on a major expansion spree and Indian banks and financial institutions are pooling in massive resources.

But this may not be enough and some bankers expect companies to access other financing avenues such as capital market and overseas borrowing. Yet others feel that financial closure of many projects might have already been achieved and the implementation might not lead to fresh sanctions.

There is an overall economic recovery, thanks to improving operating profits and favourable equity market conditions this year. Almost every infrastructure sector is witnessing investments driven largely due to government support.

Both Crisil and the Centre for Monitoring Indian Economy (CMIE) have nearly doubled their capital expenditure (capex) estimates for the next fiscal year to a whopping Rs 6,60,000 crore and Rs 7,00,000 crore, respectively.

“Every capacity addition activity leads to job creation, it cannot be a jobless growth. I cannot put a number on how many jobs would be created from the projected Rs 7,00,000 crore capex spending during 2010-11, but for every industrial job created, the multiplier effect in form of other jobs like contracts, etc, is 1:4,” says Ajit Ranade, chief economist of Aditya Birla group.

Some of these investments include

NTPC – 16,400 crore investment to expand coal based electricity production by 4100 MW
Mahindra & Mahindra – 2500 crores at Chakan near Pune to make 3 lakh vehicles annually
Tata Motors – 1500 crores at Sanand in Gujarat to make the Nano car
Renault Nissan – $990 million (approx 4500 crores) in Chennai to make 4 lakh cars annually
Maruti Suzuki – 2500 crores investment in Rohtak, Haryana
JSW Energy – 4200 crores
GVK Power – 3200 crores
Tata realty – 1370 for highways
IRB – 1824 crores for highways
Jindal – 47,000 crores for coal to liquid fuel plant & thermal power plant in Orissa
Tata -  21,000 crores project in Kalinganagar, Orissa

“There would be huge money coming as foreign direct investment in the next fiscal while the external commercial borrowing norms are expected to be relaxed further. Besides, India’s savings rate is 34-35 per cent of GDP, which translates into huge savings at the projected Rs 70,00,000 crore GDP for fiscal 2010-11. Hence I think, despite having high borrowing plans from the India Inc, capex spending by private and public sectors could be easily absorbed,” says Ranade of Aditya Birla.

Read the full articles here and here

Above picture courtesy: Abhijitkar

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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

Have tried to put up a pictorial representation of the logos of all companies invested.  Have a few things in mind which i want to work on.  As of now, its all fuzzy.  As things clear up, you will see more information on companies, investments, economy, movement of stocks and stuff on that page.

Since my biggest hobby Movies , already has its own dedicated page, it was time my second biggest interest, Investments also had its own page.

More as time goes by.

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