As much as the pundits keep harping the positive adjectives about the economy - stabilizing, growing, black, green, shooting up, etc. etc. - I still feel very uneasy at the state of affairs.
Yes, the stock indices went up.
Yes, the job loss numbers are coming down.
Yes, the banks (some at least) are reporting.
Yes, they are buying more cars than last year.
Yes, this...
Yes, that....
Yet - I still feel these are all just glossing over the reality.
That - the economy is not really strengthening at its core. But the icing is made sweeter. That's all. Me feels, it's just the speculative investers making the money. It's just the institutions trying to control the costs and showing black/green. It's just the incentives offered by various quarters pushing the public (some of them) to spend and boost the numbers.
But, the fundamentals of the economy are 'still strong' - as McCain famously said last year. Nothing (or not much) has changed since - to change the way business is done. Consumer credit is still in danger of collapsing. People are still living dangerously on borrowed money. 'Leaders' are trying for the 'feel good' factor rather than 'doing good'.
Or may be we will continue to grow this 'bubble' until the next burst, without actually changing anything. And may be that's how economies operate - not on reality but on speculation. Only.
Oh well... let's see.
Swasti!!
Showing posts with label Finance. Show all posts
Showing posts with label Finance. Show all posts
Friday, October 30, 2009
Sunday, May 24, 2009
Real or Surreal?
The way the stock markets have risen over the past two months belies the real strength of the economy, I feel. Not that I was looking for a complete crash to sub 5k levels, but looking at the lost jobs statistics, the wealth/funds that were wiped out across different sectors, coupled with the beating the financial institutions took - this growth trend looks surreal to me.
True, I am not a stock-market investor and don't know the intricacies of how the markets work. However with so much at stake for everyone, as the assets of various companies - financial or otherwise - are at stake in the markets and decide the future of many more jobs, I am concerned. Is it just the hype created by the yet-again-cooked-up numbers by the various companies and banks or the hope created by the Obama administration that's behind this rally?
If it's really real - then that's great. But if it's surreal without any solid basis, then it's better we go through the proper correction and come back strong, not overnight but gradually on the strength of real performance.
As always, only time will tell!
Swasti!!
Tuesday, April 07, 2009
I am with the G-19
During the recent G-20 conclave, Obama tried hard but failed to get the European heads of state to commit additional stimulus packages in their own countries in his ongoing efforts to try and kick start the economy back to speed. However, almost all the other heads of state are fixated on more market regulations and other long-ranging measures. I must admit, although I am a staunch Obama supporter - I am squarely with the G-19 on this issue.
Simply pumping more and more billions into the market, without the needed checks and balances in place, is not going to bring true economic revival. True, it will make the investors (read, speculators) happy, and helps drive up the indexes. However, the fallacy of this policy is that once the stream of stimuli stops coming, the market (again read, speculators) will have nothing else to speculate upon and drive down the markets. Because, I believe, 'the fundamentals of the economy are not strong' (to borrow from Joe, the Also Ran). These investors look for each and any such stimulus or short term gains news and pump up the market, as we have seen recently. Once that stops, they run out as fast as they came in - at the expense of common man, thus wreaking further havoc on the psyche.
So, even if it is painful, I'd say - stay the course; strike the iron while it is hot - bring in the correct checks and balances needed for the long term health of the system, rather than announcing one package after another. That's what we expect of the man with the vision - long term vision, i.e.
Swasti!!
Simply pumping more and more billions into the market, without the needed checks and balances in place, is not going to bring true economic revival. True, it will make the investors (read, speculators) happy, and helps drive up the indexes. However, the fallacy of this policy is that once the stream of stimuli stops coming, the market (again read, speculators) will have nothing else to speculate upon and drive down the markets. Because, I believe, 'the fundamentals of the economy are not strong' (to borrow from Joe, the Also Ran). These investors look for each and any such stimulus or short term gains news and pump up the market, as we have seen recently. Once that stops, they run out as fast as they came in - at the expense of common man, thus wreaking further havoc on the psyche.
So, even if it is painful, I'd say - stay the course; strike the iron while it is hot - bring in the correct checks and balances needed for the long term health of the system, rather than announcing one package after another. That's what we expect of the man with the vision - long term vision, i.e.
Swasti!!
Monday, March 02, 2009
Wake up the bull? Not anytime soon...
Markets are going down for a few months now. Not just in the USA, but everywhere. One would think the indexes have tanked and they will start turning back up pretty soon. But every passing day brings with it some other bleak story - pushing the numbers further down. Once in a while we see speculators pushing it up a little bit, in vain hopes of the govt. recovery package doing wonders. But alas, we see the bear shaking its back ever more vigorously on the Street.
We have seen hundreds of thousands of jobs wiped out recently. Many more are on their way out. Again, not just here - but every where else as well. Banks collapsed. Many companies were shut down. Auto giants are on their way out or getting ready to be marginalized to being minions. One would think the nation would start getting into a savings mode never seen in recent times. But I haven't seen that in my community here where the restaurants and malls are ever so crowded even during weekday evenings, let alone on weekends.
Then we have the learned economists asking the public not to withdraw into their savings shell, but continue to spend as if nothing has happened. They say that is the only way to beat the recession. Yeah - right! Aren't these the same elite who brought about this situation? How can a reliable solution come out of their brains, which created this mess in the first place? Are we to believe that they realized their mistakes and now are prescribing the right formula?
Methinks, in simplistic terms, that all these economists and highly learned folks, complicated the otherwise keep-it-simple theories only to suit their own self serving purposes without any social relevance in mind. You earn money, save it and spend it for your needs first, and then wants. You borrow at times to meet those. But what we have seen is that the second step is missed completely in recent times and that the wants and may-be's have become needs and cannot-live-without's. All because of the media and marketing blitz added to the plethora of pundits that rule this world with their short-circuited brains and convoluted thinking.
Keep it simple, stupid!
Swasti!!
We have seen hundreds of thousands of jobs wiped out recently. Many more are on their way out. Again, not just here - but every where else as well. Banks collapsed. Many companies were shut down. Auto giants are on their way out or getting ready to be marginalized to being minions. One would think the nation would start getting into a savings mode never seen in recent times. But I haven't seen that in my community here where the restaurants and malls are ever so crowded even during weekday evenings, let alone on weekends.
Then we have the learned economists asking the public not to withdraw into their savings shell, but continue to spend as if nothing has happened. They say that is the only way to beat the recession. Yeah - right! Aren't these the same elite who brought about this situation? How can a reliable solution come out of their brains, which created this mess in the first place? Are we to believe that they realized their mistakes and now are prescribing the right formula?
Methinks, in simplistic terms, that all these economists and highly learned folks, complicated the otherwise keep-it-simple theories only to suit their own self serving purposes without any social relevance in mind. You earn money, save it and spend it for your needs first, and then wants. You borrow at times to meet those. But what we have seen is that the second step is missed completely in recent times and that the wants and may-be's have become needs and cannot-live-without's. All because of the media and marketing blitz added to the plethora of pundits that rule this world with their short-circuited brains and convoluted thinking.
Keep it simple, stupid!
Swasti!!
Saturday, January 10, 2009
Different story line please...
Going by the seemingly orchestrated surrender of Satyam founder Raju, and the Govt/Police tactics in helping him skip the SEBI interrogation on Saturday, methinks - by Monday or thereabouts Mr. Raju and his brother will suffer some severe health problems (chest pain/heart attack being the top of the line item in these circumstances) that necessitate their corporate-hospitalization. Whenever SEBI officials approach for interrogation, the patients will be unconscious due to sedation etc. etc. You get the plot...
Haven't we seen this plot being played out in umpteen high profile cases already? I would like to see a different, 'just' plot played out this time around... but as long as the 'producers' and the 'directors' are the same, we can't expect a different kind of movie - come which ever actor plays the lead role :(
Some spice to fill the headlines when the media is getting worried about a bland January...
Looking forward to Obama's inauguration...
Swasti!!
Haven't we seen this plot being played out in umpteen high profile cases already? I would like to see a different, 'just' plot played out this time around... but as long as the 'producers' and the 'directors' are the same, we can't expect a different kind of movie - come which ever actor plays the lead role :(
Some spice to fill the headlines when the media is getting worried about a bland January...
Looking forward to Obama's inauguration...
Swasti!!
Wednesday, January 07, 2009
It's a lie
Indian Software giant Satyam's Chairman B. Ramalinga Raju sent in his resignation letter culminating very troubled times at the company which were precipitated by the recent failed bid to acquire Maytas, a sister-concern (not sure why the term brother-concern is never used). His letter revealed 'facts' about falsifying the accounts over several years. It immediately reminded me of a telugu movie Nijam, with its tag line 'It's a lie'. It fits this company very well during these troubled times: Satyam - It's a lie.
However, I do feel the company has done great work, and grew phenomenally over the past decade. I feel for the Satyam employees who have to face the economic reality of this event. I hope and pray for their economic security.
It's always the greedy few, anywhere, that bring the system down. We have already seen it on the Wall Street and other world markets last year for the umpteenth time in history. The likes of Harshad Mehta, Bernard Madoff et al come to mind. I think the revelations in the letter are only a few and there are many more to follow (will they ever see the light of the day?) Why do I say that, without any basis? It's my strong feeling that a wrong, done over a period of time, is not done in isolation. A person committing it must be so corrupt in his/her thought process that it permeates to other walks of life as well. Anyway, let me not turn this into a philosophical note.
With hopes for the best and looking up to 'Satyameva Jayate' (Truth alone prevails),
Swasti !!
However, I do feel the company has done great work, and grew phenomenally over the past decade. I feel for the Satyam employees who have to face the economic reality of this event. I hope and pray for their economic security.
It's always the greedy few, anywhere, that bring the system down. We have already seen it on the Wall Street and other world markets last year for the umpteenth time in history. The likes of Harshad Mehta, Bernard Madoff et al come to mind. I think the revelations in the letter are only a few and there are many more to follow (will they ever see the light of the day?) Why do I say that, without any basis? It's my strong feeling that a wrong, done over a period of time, is not done in isolation. A person committing it must be so corrupt in his/her thought process that it permeates to other walks of life as well. Anyway, let me not turn this into a philosophical note.
With hopes for the best and looking up to 'Satyameva Jayate' (Truth alone prevails),
Swasti !!
Tuesday, November 25, 2008
Economy, Rescue and Recovery
As the Fed announced the $800 billion plan today, to finance consumer loans and to push down mortgage rates - I was left wondering why it took so long for the govt. to think of rescuing the people. It's been a month, almost, since the $700 billion plan was announced to rescue the financial institutions - after they began to fail/fall like a pack of dominoes.
It only reinforced my unscientific, personal belief that govts. all over only react immediately whenever the giants fall. The average consumer has been bleeding for more than a year now. Mortgage payments are being defaulted; houses are being foreclosed. Didn't the govt. foresee this? Had they taken steps earlier, the rescue could have been limited to a few hundred billion $$$ rather than running the bill into trillions as is happening now. We could have even saved a few bank failures and job losses in the process.
If an individual is not fiscally responsible and fails to make timely payments - s/he is made accountable and made to face the consequences (both financial and legal). However, when it comes to institutions, if they fail - the people running them are let go without any penalty. Often times, they are treated with a severance package as well. And if the debacle is very bad and the insttn. is very big, it is shored up with a rescue package. As we are witnessing now.
Therein lies the fundamental problem with the way peoples and economies are managed/governed, I feel. Be it capitalistic or socialistic - a democratic society will have to take care of the people, first and foremost. When the focus shifts to institutions rather than the people - such society is bound to fail sooner or later. People, after all, are the backbone of any society.
I am glad good sense prevailed on the Fed and Treasury folks at least now and they plan on helping the comman man who's hurt badly. But, again without any scientific evidence, my gut tells me that this economy will not start looking north again until the summer of 2010 - and that's 18 months away, at least. We haven't seen the worst yet.
Wishing and praying for good times -
Swasti !!
It only reinforced my unscientific, personal belief that govts. all over only react immediately whenever the giants fall. The average consumer has been bleeding for more than a year now. Mortgage payments are being defaulted; houses are being foreclosed. Didn't the govt. foresee this? Had they taken steps earlier, the rescue could have been limited to a few hundred billion $$$ rather than running the bill into trillions as is happening now. We could have even saved a few bank failures and job losses in the process.
If an individual is not fiscally responsible and fails to make timely payments - s/he is made accountable and made to face the consequences (both financial and legal). However, when it comes to institutions, if they fail - the people running them are let go without any penalty. Often times, they are treated with a severance package as well. And if the debacle is very bad and the insttn. is very big, it is shored up with a rescue package. As we are witnessing now.
Therein lies the fundamental problem with the way peoples and economies are managed/governed, I feel. Be it capitalistic or socialistic - a democratic society will have to take care of the people, first and foremost. When the focus shifts to institutions rather than the people - such society is bound to fail sooner or later. People, after all, are the backbone of any society.
I am glad good sense prevailed on the Fed and Treasury folks at least now and they plan on helping the comman man who's hurt badly. But, again without any scientific evidence, my gut tells me that this economy will not start looking north again until the summer of 2010 - and that's 18 months away, at least. We haven't seen the worst yet.
Wishing and praying for good times -
Swasti !!
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