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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The whole collapse was fueled by the excesses of the financial institutions and the professionals who were a part of them.  Technology ensured that that complex financial products like CDOs were sold to institutions, retail investors.  People with no jobs were given loans to buy property, excessive salaries for brokers, heads of major financial companies only made them greedier leading to more and more desperation in inflating sales so that they could take a bigger and fatter pay packet at the end of the month.

Prostitution, fake bills, consuming cocaine and other forms of drugs, splurging on luxury goods, bay-front properties, casinos etc was the order of the day for the bankers, brokers employed in these institutions on Wall Street.

According to this list provided by the Federal Deposit Insurance Corporation, more than 370 banks have closed down since the beginning of 2008. An estimated $14 trillion was lost because of the crisis.  And that is just a lower estimate.  The true cost of the whole crisis might never be known.  Millions of jobs lost, tens of millions of people pushed back into poverty.

All those responsible for the crime were never brought to justice, nor will they ever be. Some of the ones who violently opposed any form regulation of the financial industry which was the basic cause of this financial crisis are now sitting comfortably in the seats of power.  They are today part of the government.  Alan Greenspan, Ben Bernanke, Timothy Geithner; everyone contributed their part to the crisis not to mention Dick Fuld (Lehman Brothers), Angelo Mozelo (Countrywide Finance), Hank Paulson (Goldman Sachs & Treasury Secretary in 2006), George Bush, Bill Clinton etc were in some way or the other responsible for the mess we find the world in.

During the boom years of the 2000s, there were lots of people hectoring the Reserve Bank of India (RBI) for taking a conservative stance and blaming the RBI for not opening up the financial markets to the so-called reform that the US was doing. Its that same conservatism that shielded India and its banks from getting smashed up by the tsunami created in the US and world financial markets.

For years, the Wall Street had been my dream place to work.  I loved the whole idea of minting money the way the bankers made.  From the late 90s till the collapse in 2008, i had a rosy idea of these places. In fact, my dream job would have been working with Lehman Brothers, Merrill Lynch etc.  As i kept reading about the collapse in 2008 and the circumstances that lead to it, it not only crumbled my dreams but also made me think if i could have handled such a life of debauchery & lies that were commonplace in this industry.

Would i be able to mis-sell a product to a retail investor and then go home and sleep peacefully?  The movie raises a lot of questions about morality and your job.  For every parent who wanted their kids to join the financial industry and make tons of money, this movie is an eye opener.  Money is there in abundance, but what we need to realise is if there is the moral compass that can guide us when the excess money flows in.

Are you an investor in real estate, stocks, bonds, mutual funds etc?  Are you planning to make a career in the financial industry?  Do you know someone who works there?  This movie is a must watch and the book “The end of Wall Street” is a must read.  Roger Lowenstein writes a blow by blow account of the last few days of the collapse of the Wall Street.  Its a riveting read.

And yes, if this doesn’t outrage you, nothing will.  Because in the world of finance, there is something called TBTF (Too Big to Fail).  Just become big by hook or by crook and then the government will ensure that you will never fail.  They will always bail you out no matter how big an asshole you have been.

“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

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The terrorists born and bred under the patronage of the Pakistani military which was pursued as a strategic interest has now attacked the PNS Mehran naval base and destroyed 2 P-3C Orion maritime patrol aircraft (bought from the US as strategic interest against India).  Ironical how one strategic interest is conflicting with the other.

After being kicked in the butt by the US who unilaterally took action to kill Bin Laden in Abbotabad, now Pakistan has run to its other “all-weather” friend China.  What is funny is how Pakistan has no qualms prostrating itself in front of anyone who can give it alms.  There is no shame or determination to take the country on the path of economic development or spine demonstrated by successive governments.

The begging is what takes the cake.  After leeching off almost $15 billion from a naive American government post 9/11 in the guise of “war on terror”, they have run to their other friend, China who has over the decades not even given $500 million in aid.   In an effort to pitch one superpower against the other, Pakistan is now trying to threaten US that if it doesnt stop the attacks on its soil, it will run into the willing arms of its rival, China.

Pakistan is like the country who keeps a gun to its own head and threatens everyone else.  Its high time the US government calls its bluff and cuts off all aid.  Then see how long Pakistan can sustain itself.  You will soon see the Pakistanis grovelling on all fours and coming back apologising.

One is confused if one should sympathise with the thousands of innocents being killed in Pakistan by suicide bombers and other terrorist acts.  The Indian government’s constant harping that a peaceful and stable Pakistan is in our own interest is nothing but hogwash.  A stable and peaceful Pakistan is nothing but a bigger headache for India than one that is broken up into a few pieces and let all the pieces either live in peace of fight amongst themselves.

The earlier the Indian government realises the folly of engaging the Pakistani government or its masters (their Army & ISI), the better it is for them.  I rather the Indian government put their energies in building better relations with Bangladesh, Bhutan, Nepal, Myanmar & Sri Lanka.

For starters, how about throwing open our economy to the above mentioned 5 countries for free trade.  Its time we stopped behaving like a big brother in the neighborhood and display our large heartedness to these countries who are more worthy of our time, money and friendship.

Above pictures courtesy: NDTV

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This book is a look into the next 100 years by George Friedman (no relation to Thomas Friedman of the New York Times).  George Friedman is the chief executive of STRATFOR, a private global intelligence firm he founded in 1996. He has spent more than 20 years teaching political science and has commented extensively on security and defense issues.

Though its difficult to accurately predict what can happen next year, Friedman lets his thoughts into the next 100 years based on the situations and issues that have shaped the past 100-200 years.  Based on this he comes to the conclusion that in the next 100 years, the major powers of the world would be (hold your breath) USA, Japan, Poland and Turkey.

He goes on to describe that by the end of the current decade (2020), China would have disintegrated and Tibet liberated with active participation by India and China will either go back to its closed doors policy or become a non-entity.  Yes, China has to keep up its blistering growth or else there could be serious trouble among its population which has no other outlet to express its disenchantment against the communist government.  But to think that the communist government hasnt thought about it and doesnt have a plan B is difficult to imagine.

The author asserts that the United States power is so extraordinarily overwhelming that it will dominate the coming century, brushing aside Islamic terrorist threats now, overcoming a resurgent Russia in the 2010s and 20s and eventually gaining influence over space-based missile systems that Friedman names battle stars. Friedman is the founder of Stratfor, an independent geopolitical forecasting company, and his authoritative-sounding predictions are based on such factors as natural resources and population cycles. While these concrete measures lend his short-term forecasts credence, the later years of Friedmans 100-year cycle will provoke some serious eyebrow raising. The armed border clashes between Mexico and the United States in the 2080s seem relatively plausible, but the space war pitting Japan and Turkey against the United States and allies, prognosticated to begin precisely on Thanksgiving Day 2050, reads as fantastic (and terrifying) science fiction. Whether all of the visions in Friedmans crystal ball actually materialize, they certainly make for engrossing entertainment.

source: Amazon

There are a lot of issues on which i dont agree with the author of the book.  Other than a few instances, Friedman makes no mention of India in the whole book.  He says that India would be a regional power with no impact on the global affairs.  I cant understand how he manages to just discard a country that could have 1.5 billion people by 2050, the world’s top 5 standing army, one of the best airforce and naval power, not to mention an economy of at least $ 20 trillion by 2050 (conservative estimates).

I tried making a small comparison chart of the countries that are supposed to be significant players (according to Friedman) in the next 100 years versus India.  A cursory glance at the figures and its easy to see why the book is way off on its prediction.

* Data belongs to year 2009
** All figures are in US dollars
*** GDP & per capita is PPP
**** Data sourced from CIA website

But he goes on and on about Turkey and Poland being significant leaders in Europe who will militarily crush the rest of Europe.  There is hardly any mention of France or Britain.  Germany according to Friedman would be on the decline.  Agreed on that, but to dismiss the German power with regards to Turkey and Poland is simply too far fetched.

He also speaks a lot about Mexico which could be the top 10 economies by 2050, but no mention of India which could be the top 3 economy by 2050.  The author looks too enamoured by USA and believes that they will maintain status quo into the next 100 odd years.  Of course, no one believes that US will just lie down and die, but to imagine that the disastrous economic policies pursued by USA would have no impact into the future is a bit too far fetched to believe.  As for Japan, its negative population growth combined with its insignificant economic growth for the past 20 odd years have dented its abilities both on the economic as well as military front.  As a country that doesnt encourage any form of immigration, Japan will be in deep trouble as it has to cope with a rapidly graying population.  If it opens its doors to immigration, its will have to face a lot of social tensions.

The book is a good read, if you are into fantasies and would love to have a good laugh.  Surely not a book to be taken seriously.

The Next 100 Years: A Forecast for the 21st Century
Author – George Friedman
Pages – 272
Publisher – Doubleday

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Say no to crackers that cause noise and air pollution.  There are better ways of celebrating the festival with family and friends.

We are in the final 2 months of the year.  2010 seems to have sped past even before we could realise.  Some bumper performance by the companies pre-Diwali and am sure when the 3rd quarter results are unveiled, there could be even better performance to see.  Not to mention, Obama making his trip to India coinciding with the festival.

Enjoy the holidays and stay safe.

Previous Diwali posts of 2009, 2008 & 2007

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Unwittingly of course, India had been resorting to its own plan of undoing this pearls by its Look East policy that it put in place a couple of decades ago.  Over these years, India has strengthend not only economic, but also military partnership with some key nations of South East & East Asia like Japan, South Korea, Philippines, Indonesia, Thailand & Singapore.

Its no secret that China is one of the biggest trading partner of ASEAN as well as of Japan & South Korea.  But its also a fact that most of these countries are not comfortable with the flooding their domestic markets with Chinese goods.  Also China’s yuan manipulation keeps the prices of their goods cheaper and affects the local economies of countries like Vietnam, Philippines, Thailand, Indonesia etc.  And many of these countries are already protesting the same.

The increasing economic clout of China has also massaged its military ego and it now has a lot of territorial claims against countries like Japan, Vietnam and other South East Asian countries.

It is in this context that one can see how India’s Look East policy is reaping rich dividends.  Not only has it led to economic benefits, but also robust military exchanges between the countries and India.

In all these hoopla, what is not being missed is the increasing defence collaboration between the militaries of America and India.  During the cold war era, India was fully dependent on the Russians for arms supply.  with the collapse of the USSR, the spares dreid up and defence procurement dipped to a low for India. During the Kargil war, it was the Israelis who came to India’s aid with timely supplies of spares and the required ammunition.

Today Israel and the US are increasingly becoming the biggest arms suppliers to India. Over the last couple of years, India has purchased six C-130J Super Hercules aircraft for almost US$1 billion and eight Boeing P-8I planes for more than US$2 billion (2009) from the US.

Also US is in running to bag the massive $12 billion 126 advanced figher for which the testing is already underway.

Though it would do a world of good for India to have a coherent defence policy instead of buying piecemeal arms and ammunitions.  Not to mention try to have an indegenous arms production industry within the country.  Depending on the DRDO and its allied organisations is a suicidal step for the country.  Privatisation of the defence industry would go a long step in indigenisation of defence technology.   The Mahindras, L&T, Tatas are increasing their participation in defence technology and it would do a lot of good in future.

Some good reads on this topic

How India is undoing China’s string of pearls
Delhi’s obsequious Obamamania
India counters China’s “String of Pearls” through Naval Diplomacy

Above pictures courtesy: Tactical Life & Twenty22

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Defence ministry officials say the 1.13-million Army alone has planned 14 to 18 exercises with countries ranging from the US, UK and Russia to Bangladesh, Mongolia, Thailand and Tajiskistan, both at home and abroad.

For instance, the armies of Seychelles and Singapore will be in Belgaum and Deolali in January for joint combat exercises . Similar is the case with Navy and IAF. Indian warships will hold combat manoeuvres with French warships, including nuclear-powered aircraft carrier Charles de Gaulle, during the “Varuna” wargames on the high seas in January . “Indian and French navies and air forces have build a high-level of interoperability through such exercises… We have a strategic partnership ,” said visiting French chief of defence staff Admiral Edouard Guillaud.

The US, of course, is leading the charge in this “interoperability” game, with Indian and American armed forces holding a staggering 60 or so wargames over the last decade.

Many more are in the offing. After the ‘Malabar’ naval wargames on the western coast, the “Habu Nag” amphibious exercise at Okinawa (Japan) and the “Vajra Prahar” counterterrorism drills at Belgaum earlier in the year, around 200 Indian soldiers are now leaving for Alaska to take part in the “Balance Iroquois” exercise with American special forces.

Despite defence minister A K Antony always being eager to downplay the expansive Indo-US defence relationship, the armed forces of the two nations have set a scorching pace in their bilateral engagement . Of the 64 exercises conducted by the Army between 2001 and 2009, well over one-third were with the US.

“The US is the only superpower around… We learn a lot from exercising with them. With the vast counter-insurgency experience of our professional forces, we also teach them a lot,” said a senior officer.

Above news source: TimesofIndia

Pictures courtesy: Military photos, Getty

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After the leak of more than 90,000 secret documents on the Wikileaks website, more and more sordid exposure of the Pakistani leadership are coming to light.  It was always known that the rogue intelligence agency of Pakistan, the ISI, was hand in glove with Al Qaeda in Afghanistan and Lashkar-e-Toiba and many other terrorist organisations fomenting teror in India.

But what takes the cake is the ignorant America feeding the Paki army so that it can fund the terrorists which in turn stab the American and other NATO troops currently in Afghanistan in the back.  The same money that the Americans provided the Pakistani government is now being fed by the ISI and Pakistani Army back to the Al Qaeda backed terrorists who are in turn killing the American soldiers.

I wonder how the American citizens are tolerating their government feeding the same scums who are killing their soldiers. Any civilized government would have re-looked at the horrors of the backstabbing that Pakistan has been doing to their soldiers…but not the US government.  The game of strategic reach that the US likes to play so much has stretched its resources so badly that the US economy is on the verge of a collapse.  Still, it refuses to learn from its mistakes.

Inspite of the evidence put forth by the intelligence, that the biggest snake in the hole is nothing but the Pakistani Army/ISI, the Americans seem to have no qualms sharing the same bed with them.  Pakistan has mastered the art of holding a gun to its own head and threatening to kill itself.  Its time the Americans call their bluff.

If the Americans want to withdraw from Afghanistan in 3-4 years as they predict, its best for them to rein in the Pakistani Army/ISI and strengthen the Afghan govt’s hands in developing a strong defence against not only the local insurgents but also the Army/ISI.

As for India, the best thing for it to happen would be the breakup of Pakistan.  I have always believed that a strong and economically stable Pakistan is a bigger headache for India than one which is broken up into pieces.  I love Manmohan Singh and really appreciate the hard work he is putting in trying to find a peaceful solution with Pakistan.  But he doesnt realise that he is barking up the wrong tree and that Pakistan is like the dog whose tail will always be curled.  No matter what we cant straighten it.  Its not a civilized society and probably we need to wall off the borders between the two countries and cut all strategic, business and people to people ties.

According to Canada’s former ambassador to Afghanistan, Chris Alexander…

Gen. Kayani is saying he wants to call the shots in Kabul. To do so, he is prepared to support the principal outfit launching suicide attacks in Afghanistan’s cities. He is backing the Islamic Emirate’s effort to wreck an Afghan-led nation-building process.

The Pakistan army under Gen. Kayani is sponsoring a large-scale, covert guerrilla war through Afghan proxies – whose strongholds in Baluchistan and Waziristan are flourishing. Their mission in Afghanistan is to keep Pashtun nationalism down, India out and Mr. Karzai weak.

It has nothing to do with Islam, whose principles they trample; indeed, the flower of Afghanistan’s ulema (religious leaders) have been among their victims. Gen. Kayani and others will deny complicity. But as the WikiLeaks material demonstrates, their heavy-handed involvement is now obvious at all levels.

To understand the context of this fraught relationship, read a report called The Sun and the Sky: The Relationship of Pakistan’s ISI to Afghan Insurgents, by Matt Waldman, a former Oxfam policy adviser now at Harvard. It is a chilling tale. When the scale of this complicity is fully exposed, it will rank high on the list of modern scandals.

The USA seems to have no qualms cutting off all funding to Iran, North Korea and any other country that doesnt toe its line.  But when it comes to Pakistan, it strangely behaves like an Ostrich who buries its face in the sand.

Tunku Varadarajan hits the nail on the head when he says…

We are now at a crossroads with Pakistan, a point at which we need to pull out old words from the Bush playbook. It is time to state to them—to state, in particular, to Gen. Ashfaq Parvez Kiyani, the Pakistan army’s chief of staff—that Pakistan is either with us, or against us. There can be no caveats, no exit clauses, no fine print, no weasely handwringing about Pakistan’s need to retain “strategic balance” in Afghanistan.

Some more articles on the leaked documents

On WikiLeaks, Pakistan and Afghanistan; the tip of an old iceberg

Above pictures courtesy: Pakistanisforpeace & omjiyadav

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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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India’s Leander Paes and Cara Black of Zimbabwe beat South African Wesley Moodie and Lisa Raymond of the US 6-4, 7-6 (5) to win the Wimbledon mixed doubles title here Sunday.

With this victory, Paes surpassed his one-time doubles partner Mahesh Bhupathi in winning the most Grand Slam titles for India. Paes now has six doubles and six mixed-doubles titles. Bhupathi has 11 Grand Slam titles — four doubles and seven mixed doubles titles.

Full article here

Above pictures courtesy: Wimbledon

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