Loved Dev-D

I saw Dev-D in the theater and loved it. Its in the same class as Maqbool and Omkara. Anurag Kashyap is one of the most audacious directors of our times(Vishal Bharadwaj is another). Paro's depiction is so unconventional that it just blew me away. The scene where she comes to his house and cleans it were one of the most poignant moments of the film. The songs are catchy. Emotional Atyachar is cool.

It was so refreshing to watch a contemporary take on a classic. The end, though a little filmy, did not seem unrealistic as most ppl say. Then perhaps I'm an optimist...

Looking fwd to view Gulaal. Reviews seem to be good.

US vs Japan

Japan had a huge foreign currency reserve when it plunged into recession in 1990. It kept throwing the reserves at the economy in the hope to revive it and yet did not succeed.

US on the other hand has a huge credit line with the rest of the world. It does not have much reserves to talk about but it can borrow from the entire world to revive its economy till? Till the world no longer believes its worth losing their hard earned money on someone who longer has the same credit worthiness as it once had and a bigger debt than it can service.

Give US another 4 years, by the time Obama completes his 4 years US will be in a worse mess than its today.

Mumbai Carnage

As I was flipping through the channels I saw CNN streaming about terrorist attack in Mumbai. It took me time to figure out how bad it really was. I do not think Mumbai really recovered from the blasts of 2006. This time however, their audacity seems to have gone up. Instead of planting bombs, these guys actually went on a rampage, shooting indiscriminately and mowed 125 ppl. The terrorists have become more ambitious. They are not happy just killing India's common man, they want international recognition. And boy, did they get it? CNN in US is streaming nothing else but terror in Mumbai for the last 30 hours.

I think the entire intelligence system in India is rotten. Terrorists have been able to strike at will and at any location of their choice, without our intelligence ever knowing anything about it. Be it Jaipur or Bangalore or Delhi or Surat or Ahemedabad. We haven't really been able to crack these cases even afters months of investigation. Something is seriously broken somewhere. The terrorists are ahead of us and they know how to leverage technology better than us.

Its a problem cutting across party lines and administration. We need to make the right investments in upgrading our forces and making our nation more secure.

I wish I could help, if only I knew how.

Will Obama Succeed?

There are so many expectations around the world from President Elect Obama that he may look like the messiah in a 100 years from now. This article in Nytimes collates the hope of the world. It would be a tall order to live upto the hope or hype as you may see it.

I personally think that Obama has just too many Challenges to overcome. Good thing is he is focusing on the economy first. That itself would take most of his initial months, if not years. As for foreign policies, the middle east would give him a fair chance to come through. It all depends on how he balances Isreal and the Arab world.

I think he will not be able to live up to the hype. When McCain talked about lack of track record, he was right. We do not know which way Obama is going to lean. But this certainly is America's best chance to make up to the world. Somehow I don't feel reassured. I want to be wrong on this one. I want him to be the Glue that holds the world together and yet, I'm not so sure.

Real Danger of Deflation

We have been worried sick by rising prices of commodities. It was largely due to movement of money from stock markets to the commodities market. The issue with commodities is that for most things (such as oil and food) the demand is price inelastic. That is world has to live with whatever the Oil costs. The decrease in consumption due to price shock is not very high. Same with food. In the past year a lot of liquidity left stock markets and fled to commodities. All of that is now changing with tightening liquidity. Punters are unwinding their positions and so size of the futures market is shrinking. I've not seen the numbers but I can promise you that the capital in futures mkt has shrunk more than the equities mkt.

This is also causing the prices of underlying commodity itself to crash. Oil has already come down from 147 to 64 in 3 months despite OPEC cutting production. Same will happen to food and other commodities and by this time next year a large part of the world will see deflation. It would be largely on account of high base in 2008, but I do expect prices to go down.

Same will happen to interest rates in India. By end of next year housing demand will pick up due to softening of interest rates.

Rupee is going to Appreciate

Now that the Credit Freeze in US is thawing, tide of Dollars is also going to reverse. I think the reason Dollar went up against all the currencies(except yen for the same reason though) is that US money was invested in all corners of the world. When the Credit Crisis happened, the US investors bolted from these market, dumped everything they had in local investments to convert to Dollars and brought that money over to US.

With the Credit Crisis blowing over, some of this money will find its back to these markets. In January, with the start of new financial year, US investors will start putting their money in various countries including India. Also, the price of Oil is now more reasonable and therefore I would think that the rupee now should appreciate to 45 like levels by Jan-09

Impact of Global Meltdown on China

This could be the biggest challenge for the most populous country in the world. For decades China has been growing by being the world's manufacturing base. Prosperity had kept the dissenters from voicing their thoughts against the communist regime.

All that is now set to change. With the slowdown, will come slower growth(the GDP growth in China for 3rd Quarter is already come down to 9%) and joblessness and with it will come mass unrest putting great strain on the country's political system.

Unless China can generate internal consumption to keep its people engaged and prosperous the political scene could change there in the next 3-4 years. There will be a meltdown in coming years. How long can the govt differ it is to be seen.

What could help is large scale govt spending on Infrastructure projects and welfare schemes. Good news is that with 2 Trillion dollars they have the deep pockets to make it happen. How well they manage it still needs to be seen. One thing is for sure, in this Global Financial Crises, the stakes for China are as high as for US.

HDFC Bank Market Cap Overtakes ICICI Bank

This is incredible. Just goes on to show that Banking is fundamentally a conservative business. If you do not run it that way, you are likely get into trouble sooner or later. Being bigger, more aggressive etc. has come to naught as HDFC bank whizzes by. FYI, I checked these numbers based on closing price of stocks on 22-Oct-08.

I have known a few ex ICICI guys and they pride themselves in being aggressive and mkt share. Thats what has driven them. Mkt share. That obviously has led to placing bad bets. All of these problems with indiscriminate lending and poor credit control is coming back to haunt them now. I think they got lucky last year when they raised money from the market at around Rs. 980. Now the share price is trading less than Rs. 400.

A good lesson on Banking. Be Conservative.

VP Ansari's Speech at AMU

I read this article in Indian Express and was much moved. At a time of partisan and communal politics, this kind of speech is like a breath of fresh air. I completely agree to this thoughts. Education and Equity. Muslim integration with the main stream will hinge on how the new generation embraces education and if requires asserts itself for equitable treatment.

Housing Market Rebound

Housing market is nowhere near its bottom, per this report. The 1 year rent to price ratio(A surrogate for knowing whether mkt is over or under valued) currently stands at 1:22. For last 20 years its been 1:15. Implying if the credit gets as stringent as it was 10 years ago and if there is no oversupply, then perhaps house prices would have to come down by another 25% before we hit the bottom. Given the oversupply and fears of recession, it might go even lower before it stabilizes.

Am I a pessimist, soothsayer or what?

Greenspan is Culpable for this mess

I've been reading about the housing bubble since 2004 on fool.com. They knew it was coming but no one knew when. Greenspan knew about it but dismissed it as mere froth 2005.

I think the reason he chose to overlook it instead of dealing with it was because he wanted US to come out of the recession that started in 2000-2001. People were afraid that like Japan, US will also face a long recession. Housing bubble delivered US out of the recession in a much shorter time.

This time however, even that hope is gone. There is no froth left anywhere in any sector. The winter is going to be long and harsh. Remember, the US "lost decade" started in 2007...

A Whacko Idea on building employable skills.

I think, we should conduct IQ tests for ppl, mostly for illiterates and uneducated. If someone scores above the baseline, govt trains them in manufacturing or some other useful skill and also educates them for free. Mostly in basic reading and writing so that these ppl can carry out their work and life responsibilities better.

Create an institution. That will go around, conduct tests and recruit these people. It will train them and keep them on their payrolls while lending them out to industry. It will also pay part of the money they get as unemployment insurance while allowing industry to hire and fire at will. Or there could be two such agencies. One for training and other for employment. It would need initial funding but in the long run, we have to find a way make it sustainable.

I think its a whacko idea, none the less, it might get us better trained for the future and give the young but illiterate people hope.

Secular India?

This is bad enough to catch the fancy of the west, including the pope. Hindus and Christians. The only way mass hatred / hysteria is channeled is through religious bigotism, regionalism (Maharashtrians vs the North) and Castism(Rajasthan). With growing economy, extremism is also on the rise.

Is it a way the have nots are venting their anger? Is it coming from those who feel untouched by economic boom?

Whats the solution? We know we have to have inclusive growth. We understand that better than most other nations. I feel there are enough opportunities around us, but only for the educated and well trained. Is there a way to train ppl to be economically useful?

World is going to be poorer

I was reading this post from Ny times. Experts may say that the world will be fine once the money starts flowing again. I am not convinced. I think at the end of it all, world will be a poorer place than it was till lets say mid 2007, for a long time. For how long? At least 5 years. It could be more.

Yes, wealth or at least illusion of it can be created by borrowing and overextending oneself. But without creating underlying wealth to support it it can't go on for ever. When eventually the bubble bursts, a lot of this wealth will disappear. This will show up in reduced prices for houses and reduced values of 401K for all Americans.

This will impact rest of the world too. If US can't afford the accesses any more, all the asian economies that make a living out of selling to the Americans will also be poorer.

The good thing about this crises or the bad thing, depending on how you see it, is that it will bring down the wealth of the over leveraged part of the world (that is most of US and first world). But there is an irony there. Wealth is always relative. This means that everyone is poorer, people may not be as poor as they think they might be. Let me explain, when all people earn less, the house rents and mortgages will also be smaller. Its not to say that their disposable income in terms of its buying power will remain the same. It will not. It will diminish. But it might not be as bad people think when compared to current price levels.

The asians that did not invest in this crises will be relatively richer.

I think, India will turn out on the winning side of this. Its exposure to sub-prime crisis is minimal and its not a export driven economy. All that will help. Though India is also facing liquidity crisis, I think its temporary. Its caused by outflow of hot capital as FIIs needed to cover their positions in their county or origin. It can be addressed by relaxing CRR and reducing rate. What will also help is that given all this slowdown, oil may remain subdued for a few years to come. If India does not get drunk on low oil prices, it would not have to spend all foreign money to buy it. Over all, its good for India's standing in the world. This event will narrow the gap between the rich and the poor.

GM and Ford in Dire straits

Read this article and then this one.

The US Flagship Auto Makers are on their death beds. A company like GM and Ford were the pride of US for decades till Japanese started making inroads in the 80's and irrespective of what Lee Iaccoca might have said in his book about Ford and then Chrysler its now evident that the slide that started then is now reaching its culmination. US Auto companies face annihilation. All 3 of them GM, Ford and Chrysler and even though there might be talks of merger between GM and Chrysler, I feel their time has run out.

Unless the US govt bails them out they are going to go under by this time next year.

Unconscious Discrimination

A Good article in NY Times on Unconscious Discrimination made me think about the discrimination against Muslims in India. During my short stay here in US I've come to believe that the Muslims in India have the same status as Blacks in the US.

However open minded we call ourselves, we are in some way uneasy in our dealings with our Muslim countrymen. When Shabana Azmi expressed her views on moderate muslims, a lot of people came up with examples with how our president was a Muslim and so on and so forth, but the truth is that since 1992, we are living in an increasingly polarized society.

1992 brought the Hindu-Muslim divide to even the most moderate citizens. That singular event has created a mistrust that has only grown with time. In many cities, Educated muslims have sold their properties in otherwise Hindu dominated areas and have moved to predominantly Muslim areas. Ghettos have come up in all major cities.

A relative of mine has done PHD on the biases against muslim traders and she gives examples of how the municipal corp of Mumbai neglects Muslim areas. The basic cleanliness and hygiene is missing.

Its true that given everything else is identical, if we were to choose between a Muslim and a non Muslim candidate we would lean towards non-muslim. Its a fact of life and we are all guilty of it.

That the builders discriminate against muslims is a known fact. There are Muslim only buildings and then there are non-muslim buildings. Any other religion is fine, christians, parsi, sikh all are welcome. North Indians and south indians and jains and bengalis are welcome. Muslims are not.

My theory is that the spate of violence recently is in news is an aftermath of 1992 and Godhara. Unless we make attempts to address the deep psychological divide between Muslims and the rest, there will be no peace in India.

Crisis in the US, Impact on the world financial systems

As US Congress debates over $700 billion bailout and citizens cry foul over what they see as govt sponsored robbery, the world is grappling with the ripple effects of the liquidity crisis.



Trading in Russia got suspended for 2 days until govt pumped in $120 billion into the system. RBI in India is pumping Rs 84,000 Crore(~ $20 billion) into financial system.



US is a special country. When they screw up its not just them who gets impacted. It impacts the entire world. Till about last month RBI was trying to suck liquidity out of the system to contain inflation, now its pumping in money to ease lack of liquidity issues. Nothing has changed with Indian financial system or economy except that investors from US have exited. RBI had to sell them dollars and so in turn it has collected thousands of crore of Rupees (which have been sucked out of the system). In fact inadvertantly RBI may have made some cool profit in the process. It must have accumulated these dollars earlier this year by paying @Rs40 and are now selling these dollars to perhaps the same investors @Rs45. In coming days they might even reduce the CRR to inject more liquidity in the system.



It just goes on to show how US impacts the world. I just hope US congress sorts it out quickly without getting sentimental about morals and conscience. Let history and coming generations debate this in their economics masters curriculum.

House Hunting in DC

The matter apparently resolved itself on Sat. I've been given go ahead to join work. Indian s/w services companies perhaps have one of the worst employee policies in US. I wish there was some bench mark available that would bring out the contrast between a US based company's HR policies and compare them with India based companies operating in US.

Coming to the topic. Went house hunting today. DC area is about as expensive as Bay area when it comes to rentals. Choose a house. Looked like a steal. Closed the deal. Came back to check what its residents say about it on the net. Got the gory details of the catch(gotcha). Trying to wriggle out of the deal. Lets wait and see the damages.

Holed up in DC

Its been a week and we are holed up in DC without the knowledge of what future may bring. Paid a visit to White House with my family. Finally rented a car so that I could be mobile. Planning to visit a ranch today. I'm told there would be pony rides et all. My daughter has not ridden a horse before. I hope she likes it. Weather is a hide and seek. Its been wet and darb through the week. Friday was a better.

Perspective

We were sitting at Golden Bierch sipping beer when we were informed about the loss. One of our collegue's father had passed away in his sleep. Needless to say we rushed to his place. About half a dozen guys frantically placed calls to find the fastest route to B'lore. Alas, there is no way he can reach home before 9-May. We finally took him to airport and put him on Cathey Pac flight.

In all of this somewhere, I find myself shaken up. Sitting so far away from my parents there is absolutely nothing that I can do should they face any emergency. Makes me feel helpless and vulnarable and guilty of Green Greed.