Monetise Taj

Taj Mahal is a historical place and Indian govt. has control over it. Why not govt. use it to monetise it's appeal. There are lot of companies who use Taj's image in their marketing, like Berger paints, Taj tea, etc. Why not govt take some kind of royalty from these companies?

Long Leave Indian democracy

The election results yesterday was simply stunning by any measure. None, absolutely none, in his/her wildest dream would have thought that the Congress would be getting absolute majority (almost!) at the centre. But that happened, and in style. I, though, did not favour another term for Congress govt. at centre, however I am really happy for the way Indian voters have given so clear a mandate for politics which is not divisive, not communal, pro-people, and inclusive, at least on paper. Voters have chosen the best option available to them.

I have never felt so confident about India and it's future as I do now. I now feel confident that if there is problem and none is able to decide which party, which person or which ideology should lead India, I think we should leave that to Indian voters and they will decide it best. Today I really feel proud of Indian democracy, they way it has matured and the way it will protect my future and that of my son. We can proudly tell to the world that we can teach you a lesson or two about democracy.

Long Leave Indian democracy.

More instruments in financial markets?

The current crisis in the world is caused, as they say, by the new instruments created by bankers to make more profits. The new and innovative instruments like sub-prime lending, Collateralized Debt Obligations (CDO) and likes were introduced to encourage more and more lending. And this led us to this point.

Now every experts see the problem in these instruments and blame regulators of the time for not having checked on them when these were introduced in the market.

Why not regulators make it a point that they keep a close eye on the market and see if any new types of instruments are being introduced by market players like banks, PE players, hedge players and investment bankers. When this happens the regulators should not clamp down upon them immediately instead get some of the experts together and discuss pros and cons of them threadbare. This can help unearth any shortcoming if they have and accordingly regulations can be introduced so that we do not come to this point. I know it's easy on my part to say in the hindsight.

Foreign Coaches: and their payback

I never knew that a foreign coach can add so much value to a team's performance and lift it up at least by a place. That too a coach who has been very successful in his last assignment as a coach of a successful sledging team, incidentally this team was also very successful in two formats of a gentlemen's game. Having a foreign coach, and entire an entourage of assistances and what-nots, all forrign born with white skin, to help(?) the team in every department possible. After this coach was hired, the team has been doing wonders and the coach is making sure that the team is at least not on the last spot in the ladder.
A lot of new innovations were done by this coach, like making every team member, except the one who captained team in last season, captain of the team. This way everyone has incentive to do his /(her?) best. Another innovation of packing back team members who are not fitting in the team's scheme of things (saving a huge amount of money specially during recession when money is honey). And another innovation is recruiting coach's sons in various newly created positions within team. And another innovation .......will come later. Not all today.
So out obsession with everything phoren is really paying dividend. Next time think this team's owner should also be foreign and so be all the players. That way team would be wining more games.
Our national team also had a foreign coach who is compatriot of the above coach. During this national coach out team also did wonders.
I just wonder should we not have our PM, president, everything phorener so that they take us up and up and up and we enjoy the fruits sitting on the ground.

Keeping promise: At the cost of other’s life!

Infosys has been telling (or boasting) all along that it will honour all its promises of job offers made out to the campus recruits (close to some 16000). Infosys has also got a huge bench of over 25000 staffs. So if Infosys is to be believed they will have 41000 free people to be employed in this financial year on various project (this figure may be little less if attrition is to be factored in). This tells that the company must have so much work coming its way (pipeline in industry jargon) in near future which can absorb all new and existing bench employees. There is also news that more staff would come off project this year.
But in contrast, Infosys itself has been telling that there will be almost no growth (projected 1.5% in rupee terms) in current financial year. Now we hear that company has asked its employees who are on the bench to work for its BPO arm. I understand that if company do not have enough work then it should ask employees to work for associate companies. This way jobs are saved, employees get to learn new skills and associate companies get resources when required without recruiting from outside. But what’s point in sending your existing employees to associate companies against their wishes and recruiting new (which Infy is doing by honouring its campus promises). If company does not have enough work why should it hire more which impacts job securities of its existing employee, severely impacts company financial affecting shareholders.
There is a famous saying in Ramayan “Jaan Jaaye par wachan na jaaye” (Keep your promise even at cost of your own life). Infosys seems to be following this saying, but with a little twist. Twist is that if life has to go it will not be its own but that of its employees. How unethical!

Infy Guidance: Impact on years to come.

The result by Infosys yesterday were not that bad, they were almost on expected lines but what guidance Infy gave for the year ahead was really SHOCKING. Infy gave guidance of just around 1.5% of growth in rupee terms (a negative growth in dollar terms, worst still). This was the most shocking news of yesterday and I would say of this year so far.
Implication of this piece of news is:
1. Infosys is considered the bellwether of the overall Indian IT services industry and any trend set by it is considered to be replicated by the overall industry. So we can safely assume that the overall IT industry would also grow at the same rate. That is almost a 0% growth.
2. As there would be hardly any growth in IT service industry so there would not be need for new recruitment and certainly IT industry would like to rationalize their existing bench (generally Indian IT companies maintain up to 30% bench strength). This means there would be lay-off of resources that are currently on bench in companies.
3. Real estate in India is almost singularly dependent upon the uptake from IT industry be it for commercial or residential sector. So as a result I would say it’s safe to say that there would be no takers for real-estate that means the property prices are going to CRASH badly and LOUDLY in a years’ time.
4. Indian IT industry employs a huge no. of youth. As there would be hardly any growth this year so there is going to be significant problem of unemployment this financial year.
5. As lot of industries, home loan, financial industry to some extent and many more industries depend directly or indirectly for their growth on the growth of IT industry, so these industries would not be growing and that would impact employment too. So ultimately India would see huge unemployment problem among the educated youth (thankfully for political parties the election would be over by that time).
6. Infosys is saying that there would be hardly any new requirement for IT services in their target markets (western world), that clearly says that there would be no growth in those economies for this financial year. So a badly needed pickup in economic activities are still at least a year down the line. This means if we reasonably assume that economies in the west would start picking up only after this financial year (if nothing goes wrong now of which there is no surety). It would take at least a year for western economies to take off and then they will generate the requirement for IT offshoring so Indian IT companies should wait at least 2 year for their services to be required.
7. When in 2000 dotcom went bust, IT industry in India was impacted in 2001 and it took another 3 years for requirement to pick up. It’s only from 2003 end that serious recruitment started by IT companies. Which means a small problem like dotcom took two years off from the job market growth in India. Assume how long it will take this time as the problem is far far serious this time.

Impact of the World Recession on Indian economy

Recession has already arrived in US, UK and major EU economies; China is also going to be affected badly. China’s growth is going to come down from 12% last year to around 8% this year which is a big hit on its growth. So there is overall slowdown in the growth of the world economy so the impact of recession is going to be felt definitely in India. Here in my view how some of the sectors would be impacted in India.

Stock Market
As already seen, Indian stock markets are down more than 60% from their high point. So we can already see the impact there. As more money dries up in the world this is going to impact stock market in India further. The bull run on Indian stock markets have been due to easy availability of cheap money in the world market but this is no more the case now so we are not going to see the same high for few years now.

IT and BPO
Indian IT has always survived because of the western economies, as major western economies slowdown the work being offshored to Indian IT companies is going to freeze in near terms as client cut on all unimportant work (and some important work too). So there will be less work for IT companies in near term. This will trigger job cuts in IT in west and India. This is already happening in India, though will be on very low scale as compared to the west.
But in the long term, as the western economies start getting back on their feet, they will generate more IT work and then they will not have enough IT workers (after having laid off in current recession) so they will offshore more of that to India. Also the rush for efficiencies in the operations would drive more work to offshore so we will see better future for Indian IT in medium to long term.

Housing and real estate
Real estate in India is going to suffer badly, even if govt. tries to provide any incentive, which real estate industry is asking for. As most of growth in this industry came from speculation and false future projections, the industry is going to have a hard landing before picking up again. With likes of Lehman brothers gone with the wind, there will be less of outside money to invest in real estate in India, so realism will set in here. Already the stock prices of major real estate players are down more than a shocking 95%. It was pure speculation.

Infrastructure
Infrastructure projects like, roads, ports, power etc. will suffer because of difficulty in getting money and general aversion among investor for any risk now. Also Indian govt. does not have money like China which can spend on such project to stimulate the economy.

General Economic Reforms
Already Indian govts. have always been reluctant to go for far-reaching reforms. Now they will be more so. And political parties like Left would be making more noises now. Seeing the mayhem in the world financial markets govt will be very cautions to go for any reforms. Also earlier US govt used to push for reforms in India but now they would be shy in doing so one for the mess in their backyard and second they do not have a face now to show to the world that free capitalism is the only way to go. This will slowdown the economy.

Non-IT export
We have already been hearing news of layoffs in export oriented industries like gems and jewelry, apparel, leather, auto component etc. The impact of this is definitely there on general economy.

General Economy
Though we hear people say that Indian fundamentals are strong and we can sustain our own growth but that is like running away from reality. Because of globalisation we are now more linked to the world economy than anytime in future so if world is suffering we cannot remain immune to it.
When all industries are slowing how can we expect the general economy to grow. Never. If IT slows down it impacts job market and the easy spenders, related ancillary industries gets affected too due to this. If there is slowdown in infrastructure then that would impact cement, steel and other industry. So we can see that almost all the industries of the economy are going through the rough phase so there is overall slow growth.
But we in India have lot of optimism as we can see the light at the end of tunnel. So this time is just for reflection and to prepare ourselves for better times which are just around the corner.

Financial Crisis:Animals extinct so far

Whenever there is earth shattering change on the earth some animals just disappear because they can not cope up with the changes and they were not prepared for these changes. Dinosaurs were a breed which became extinct because they could not survive the changes taking place on the earth at that time. Now in the current financial tsunami as well many financial animals (banks) are becoming extinct because of the very same reason.
Here are some of the banks and financial institutions which have now become extinct or become too dependant on others or governments they can not survive on their own.
Animal extinct so far

1. New Century Financial, one of the biggest sub-prime lenders in the US
2. Dillon Read Capital Management, UBS’s US sub-prime lending arm
3. American Home Mortgage, one of the largest US independent home loan providers
4. Sachsen LB Landesbank faced collapse, Landesbank Baden-Wuerttemberg buys it
5. Northern Rock
6. Bear Stearns was acquired by JPMorgan Chase
7. US mortgage lender IndyMac collapsed -- the second-biggest bank in US history to fail.
8. Fannie Mae, rescued by the US government
9. Freddie Mac, rescued by the US government
10. Lehman Brothers
11. Merrill Lynch
12. Insurer American International Group
13. HBOS, British bank
14. Bradford & Bingley is nationalised
15. Germany’s Hypo Real Estate, commercial property lender
16. Washington Mutual, mortgage lender , sold to its JPMorgan Chase
17. Goldman Sachs
18. Morgan Stanley
19. Fortis, the European bank, partly nationalised
20. Glitnir, Iceland’s third largest bank is nationalised
21. Wachovia, bought by Citigroup
22. European bank Dexia is bailed out by he Belgian, French and Luxembourg governments
23. Icelandic internet bank Icesave is closed
24. Icelandic banks Kaupthing Edge gone into administration and is nationalised
25. Icelandic bank Heritable Bank gone into administration
26. Royal Bank of Scotland (60%) end up being owned by govt.
27. Lloyds TSB/HBOS(40%) end up being owned by govt.

There are only the prominent names there have been many hedge funds and smaller insititutions who are closed unceremoniously and not reported in media.

…..and more to come

After institutions now it seems it’s turn of countries:
Following are the countries who have so far felt the pressure due to tsunami and their existence is dependant on other’s help

• Iceland
• Pakistan
• Ukraine
• Hungary
• Belarus

Obviously the tsunami does not seems to be mild one.

Sub-prime criris and how it started..

Thanks to www.rediff.com for having produced such a nice cover of subprime crisis.

1. August 9, 2007
   The official date when the crisis is said to have hit global finances. But the rot had started much earlier.
2. In 2006, the US housing market started to feel the pain of high interest rates -- which, between 2004 and 2006, had risen from one per cent to 5.35 per cent -- resulting in default rates on *sub-prime loans rising to record level.
3. February 22, 2007: HSBC fires head of its US mortgage lending business as losses reach $10.5 billion.
4. March 8, 2007: Biggest US house builder DR Horton warns of huge losses from sub-prime fall-out.
5. March 12, 2007: Shares in New Century Financial, one of the biggest sub-prime lenders in the US, were suspended amid fears it might be heading for bankruptcy.
6. March 13, 2007: Wall Street hit by sub-prime fears and on March 14, the sell-off on US and Asian markets saw the Sensex close with a loss of 453 points at 12,530.
7. March 16: US-based sub-prime firm Accredited Home Lenders Holding said it would sell $2.7 billion of its sub-prime loan book -- at a heavy discount -- in order to generate some cash.
8. April 2 2007: New Century Financial, which was once the second-largest originator of sub prime mortgages in United States files for Chapter 11 bankruptcy and lays off 3,299 people.
9. May 3, 2007: GM finance unit loses heavily on sub-prime mortgages, and UBS closes its US sub-prime lending arm, Dillon Read Capital Management.
10. June 22, 2007: Investment bank Bear Stearns revealed it had spent $3.2 billion bailing out two of its funds exposed to the sub-prime market. The bailout of the fund was the largest by a bank in almost a decade.
11. July 18, 2007: Bear Stearns rings the warning bell. It tells investors that they will get little, if any, of the money invested in two of its hedge funds after rival banks refuse to help it bail them out.
12. July 20, 2007: US Federal Reserve chairman Ben Bernanke warns that the US sub-prime crisis could cost up to $100 billion.
13. July 27, 2007: Worries about the sub-prime crisis hammered global stock markets and the main US Dow Jones stock index slipped.
14. July 31, 2007: Bear Stearns stopped clients from withdrawing cash from a third fund, saying it has been overwhelmed by redemption requests. The lender also filed for bankruptcy protection for the two funds it had to bail out earlier.
15. August 6, 2007: American Home Mortgage, one of the largest US independent home loan providers, filed for bankruptcy after laying off the majority of its staff.
16. August 9, 2007 French banking major, BNP Paribas announced that it could not fairly value the underlying assets in three funds -- Parvest Dynamic ABS, BNP Paribas ABS Euribor and BNP Paribas ABS Eonia -- as a result of exposure to US subprime mortgage lending markets.
    Faced with potentially massive exposure, the European Central Bank immediately stepped in to ease market worries by opening lines of euro 96.8 billion (then $130 billion) in low-interest credit. The Federal Reserve, the Bank of Canada and the Bank of Japan also intervened.
17. August 16, 2007: Largest mortgage lender Countrywide draws on its entire $11.5 billion credit line as liquidity crisis looms. Australian mortgage lender Rams also admits liquidity problems.
18. August 17, 2007: The Fed cut the rate at which it lends to banks by half of a percentage point to 5.75 per cent, and once more warns of credit crunch.
19. August 21, 2007: UK sub-prime lenders begin to withdraw mortgages.
20. August 28, 2007: Leipzig, Germany based Sachsen LB Landesbank faced collapse after investing in the sub-prime market. Landesbank Baden-Wuerttemberg buys it for euro 250m. It was one of Europe's biggest victims of the credit crisis.
21. September 3, 2007 German corporate lender IKB announces a a loss of $1bn on investments linked to the US sub-prime market.
22. September 4, 2007: London Interbank Offered Rate or *Libor rate rises to 6.7975%, highest since December 1998. (*It is the rate of interest at which banks offer to lend money to one another).
    Bank of China reveals $9bn in sub-prime losses but Chinese government said its foreign exchange reserves will not be affected
23. September 14, 2007: British bank, Northern Rock, which relied heavily on the markets, rather than savers' deposits to fund its mortgage lending asked for and was granted emergency financial support from the Bank of England. The bank is now owned by the UK government.
24. September 18, 2007: The US Federal Reserve cut its main interest rate by half a percentage point for the first time in four years, to 4.75 per cent, a move that resulted in a strong rally across the globe.
25. September 19, 2007: The Bank of England announces that it will auction pound 10 billion.
    October 1, 2007: Swiss bank UBS world's biggest bank announced losses of $3.4 billion from sub-prime related investments. Later investment bank chairman and chief executive officer Huw Jenkins stepped down.
    Citigroup unveils a sub-prime related loss of $3.1 billion. Two weeks later Citigroup is forced to write down a further $5.9 billion. Within six months, its losses stand at a whopping $40 billion. On November 5, its chief executive and chairman Charles Prince resigned.
26. October 5, 2007: Investment bank Merrill Lynch reveals $5.6 billion sub-prime losses.
27. October 30, Merrill Lynch chief Stan O'Neal resigned.
28. November 9, 2007: US's fourth largest lender Wachovia revealed a $1.1 billion loss due to decline in value of its mortgage debt plus $600m to cover loan losses (total $1.7 billion).
29. November 12, 2007: The three biggest US banking groups -- Citigroup, Bank of America and JPMorganChase -- agree to a $75 billion superfund to restore confidence to credit markets.
30. November 13, 2007: Bank of America writes off $3 billion in sub-prime losses.
31. November 14, 2007: Mizuho, Japan's second largest banking group, saw a 17 per cent drop in first-half net profits and cut its full-year operating profit forecast by 13 per cent, largely as a result of sub-prime-related losses at its securities arm.
32. November 15, 2007: British banking major Barclays said it had written down $2.6 billion in sub-prime losses.
33. November 20, 2007: US mortgage guarantor Freddie Mac sets aside $1.2bn to cover bad loans and reports a $2bn loss.
34. December 4, 2007: US mortgage giant Fannie Mae issues $7 billion of shares to cover losses linked to the housing market.
35. December 6, 2007: President George W Bush outlines plans to protect more than a million homeowners hit by the US housing slump. The Bank of England cut UK interest rates for the first time since 2005, amid signs that the economy is slowing.
36. December 10, 2007: Swiss bank UBS reports a further $10-billion write-down caused by bad debts in the US housing market. Lloyds TSB reveals that bad debt linked to the US sub-prime mortgage crisis will cost it pound 200 million.
37. December 11, 2007: Fed cut interest rates for a third time to 4.25 per cent to ease the credit crunch.
38. December 13, 2007: World central banks agree coordinated action to inject at least $100 billion into short-term inter-bank credit markets to restore confidence.
39. December 19, 2007: Morgan Stanley writes off $9.4bn in sub-prime losses and sells a 9.9 per cent stake in the company to the Chinese state investment company CIC for $5bn to rebuild its capital.
40. January 7, 2008: President George W Bush admits that the credit crunch could slow the US economy in 2008, but says it is still fundamentally strong.
41. January 9, 2008: Bear Stearns boss James Cayne steps down after the firm reveals $1.9 billion in sub-prime losses, the largest in its history.
42. January 15, 2008: Citigroup, the largest bank in the US, reported a $9.8 billion loss for the fourth quarter and wrote down $18 billion in sub-prime losses.
43. January 28, 2008: Belgian bank Fortis warned its losses connected to bad US mortgage debt could be as high as $1.47 billion.
44. January 29, 2008: The US Federal Bureau of Investigation launched an investigation into 14 companies involved in the sub-prime mortgage crisis.
45. January 30, 2008: The US Federal Reserve cut interest rates to 3% from 3.5%. It was the second cut in nine days. US economic growth slowed.
46. February 5, 2008: US financial firm GMAC, which owns sub-prime lender Residential Capital, said it has made a $2.3 billion loss in 2007, compared with a $2.1 billion profit the year before.
47. February 10, 2008: Leaders from the G7 group of industrialised nations said worldwide losses from the US mortgage crisis could reach $400 billion.
48. February 12, 2008: Swiss bank Credit Suisse said losses on sub-prime investments were $1.8 billion.
49. February 13, 2008: Britain's Bradford & Bingley cut the value of its sub-prime mortgage-related investments by $284.5 million. Japan's financial watchdog said Japanese banks suffered losses of $5.6 billion by the end of 2007.
50. February 14, 2008: Commerzbank, Germany's second-biggest bank, cut $1.1 billion off the value of investments linked to the sub-prime mortgage crisis and warned its losses could worsen.
51. March 7, 2008: The former bosses of Merrill Lynch and Citigroup were questioned by a Congressional panel over their bumper pay -- despite huge, sub-prime related bosses at their banks.
52. March 11, 2008: Central banks made another coordinated attempt to ease conditions in the credit markets, by announcing $200 billion of new emergency lending for banks.
53. March 14, 2008: Investment fund Carlyle Capital failed as the credit crisis spreads from sub-prime related products to other mortgage-backed investments.
    Bear Stearns received emergency funding, after its exposure to mortgage-backed investments undermined confidence in the bank.
54. March 17, 2008: Wall Street investment bank Bear Stearns was acquired by JPMorgan Chase for $240m, a fraction of its share price, in deal backed by $30 billion in Fed loans.
55. March 18, 2008: Wall Street investment banks Goldman Sachs and Lehman Brothers revealed that their first quarter profits have been halved by the credit crunch.
    March 31, 2008: US Treasury announced major package to reform regulation of US financial markets and prevent future financial crises.
56. May 22, 2008: Swiss bank UBS, one of the worst affected by the credit crunch, launches a $15.5bn rights issue to cover some of the $37bn it lost on assets linked to US mortgage debt.
57. June 19, 2008: The FBI arrests 406 people, including brokers and housing developers, as part of a crackdown on alleged mortgage frauds worth $1 billion.
    Separately, two former Bear Stearns workers faced criminal charges related to the collapse of two hedge funds linked to sub-prime mortgages. It is alleged they knew of the funds' problems but did not disclose them to investors, who lost a total of $1.4 billion.
58. July 13, 2008: US mortgage lender IndyMac collapsed -- the second-biggest bank in US history to fail.
59. July 14, 2008: Financial authorities step in to assist America's two largest lenders, Fannie Mae and Freddie Mac. As guarantors of $5 trillion worth of home loans, they are crucial to the US housing market and authorities agreed they could not be allowed to fail.
60. September 7, 2008: Mortgage lenders Fannie Mae and Freddie Mac -- which account for nearly half of the outstanding mortgages in the US -- were rescued by the US government in one of the largest bailouts in US history.
61. September 10, 2008: Wall Street bank Lehman Brothers posted a loss of $3.9 billion (?2.2 billion) for the three months to August.
62. September 15, 2008: After days of searching frantically for a buyer, Lehman Brothers filed for Chapter 11 bankruptcy protection, becoming the first major bank to collapse since the start of the credit crisis.
    US bank Merrill Lynch agreed to be taken over by Bank of America for $50 billion.
63. September 17, 2008: Insurer American International Group apparently was too big to fail. The mammoth insurer, which had been pushed to the brink of bankruptcy by problems originating in the US mortgage crisis, is being bailed out by the Federal Reserve.
    The Fed will extend a 24-month bridge loan of $85.0 billion to the insurer, in return for an unprecedented acquisition of a 79.9 per cent stake in the firm by the central bank.
    Barclays announces that it will buy Lehman US units for $1.75 billion.
64. September 19, 2008: The US government proposed to create a $700-billion rescue fund for the American financial sector.
    The fund will be used to buy back bad debt from ailing US banks and other financial institutions.
    President George W Bush urged the Congress to endorse his plan as soon as possible. Congress is expected to take a decision in the coming days.
    The move increased the US public debt to $11.3 trillion.
    The President said: "This is a big package because it was a big problem." He argued that the drastic measures were necessary to keep the economy going. The president admitted that the plan would be funded with tax money, but added that "over time, we're going to get a lot of the money back."
65. Story continues...Climax is yet to come.....
    

Terrorrist Attacks : Gandhian Philosophy at the best

India today is truely following Gandhian philosophy. Today there were again terrorist attacks in New Delhi, right under the nose of the national govt. This is after a series of smilar attacks in Jairpur, Banglore and Ahmedabad. We did not learn anything from previous three attacks. Securities agency could have been alert to prevent this. But probably govt. at centre, which is Congress-led, is following Gandhi's philosophy, that if someone slaps you on your one chick, put forth the other chick as well. Congress-led central govt. went farther than that by giving fourth chance to the terrorists.
Prabably govt. is thinking at best how many such attacks will terrorist carry out. After they have done one such attack in each of cities in India, they will themselves stop. Why to worry and why put intelligence agency staffs with unncessary burden? Govt.'s thinking is after all cities are attacked once, terrorist will stop and eternal piece will prevail all over India.
God save India.