Wednesday, January 30, 2008

Peering into a crystal ball

Economic news everywhere is very grim. The headlines scream out about a recession in the US every day. The US fed keeps cutting interest rates like there is no tomorrow. Every week sees some new humongous write-offs by US and European financial institutions. Markets everywhere are in a tailspin. All in all, a portent of economic disaster waiting to happen.

I tried to step back and make sense of all of this. What does this mean? And how can one position oneself for this? First, some (foolhardy?) predictions:
  • The Indian economy will continue to chug along at around 7% real growth. High interest rates will continue strangling retail credit growth and corporate investments, and GDP growth will moderate by a couple of percentage points. Real estate, autos will be damped. However, domestic sectors like consumer goods, telecoms, infrastructure sectors, financial services will continue to flourish.
  • The rupee will continue to appreciate, driven by inflows of arbitrage seeking capital, keeping IT, textiles, auto component sectors under stress.
  • The government will try fiscal stimulants for maintaining growth - effectively, tax cuts, increased infrastructure creation, populist sops. However, in an election year, there will be high sensitivity to inflation, so money supply will be curbed with continuing high interest rates. All of this will crowd out private investment.
  • The US consumer-led slowdown will cool growth worldwide, and bring down prices of commodities like metals, oil, shipping etc. However, demand from India and China will keep oil from falling below $50-60 per barrel. This will lead to continued creation of petro-dollars, which will continue buying distressed assets in the US. Eventually there will be a backlash, and the petro-dollars will flow into markets such as India.
  • After a while, investors will realize that India is a good place for generating returns, and this will cause a slight re-rating of the equity market. In other words, goodbye to 40%+ returns, and hello to more stable 15-20% type of returns for a year.

Of course, all of this may not come true. The US economy could probably be made to have a 'soft-landing' due to the Fed's rigorous rate cuts. However, this would create conditions for the next crisis 5 years down the line. There will be more empty talk of 'de-coupling' of India, but after a decade of 8% type GDP growth, this de-coupling will actually happen.

Our kids will probably see that happen. Till then we will periodically squeeze out the excesses in our asset prices in 5 year cycles (note that the last two depressions in India happened in 1996-97, and then 2001-02). So watch out for 2012-13!!

Monday, January 28, 2008

Rediscovery of an old favourite

My wife has recently re-discovered fascination for an old favourite of mine - Erle Stanley Gardner's wonder lawyer Perry Mason, and his sidekicks Della Street and Paul Drake. Her enthusiasm has rubbed off on me, and recently we bought a lot of these books and compete with each other to read them first.

I was always a big fan of Perry Mason, not only for the involved detective stories that come together beautifully in the end, but for the explosive courtroom scenes which usually see Mason steal a march over his detractors - most notably Hamilton Burger, the district attorney- through some spectacular legal manoeuveres.

Perry Mason is a detective in the Sherlock Holmes mould - always proactive, bustling about (if not in person then through the Drake Detective Agency), and not averse to bending the letter of the law, if only to uphold its spirit. He is extremely ethical, and tremendously far sighted. Almost in all cases, he finds himself battling not only on his clients' behalf, but also on his own, since his investigations lead him against the state police machinery.

The thing I like a lot about the Mason books is that you could have read them before, yet they manage to hold your interest on a re-read, probably because the cases are so involved that you would forget most of the nuances and the actual culprit in some time (it took me only 12 months). Additionally, the foreword for each book has the author stress on some new aspect of forensic science or legal developments which are baked into the story. However, the best part is that the books remain page-turners, easy to read and able to build interest right till the last page.

Here's wishing posterity to the legacy of Perry Mason!

Tuesday, January 22, 2008

South East Asia

I dont think a lot of (market interested) people would forget this week in a hurry!

But I found this graph uncannily similar to the coastline of South East Asia - from Gujarat in India all the way upto Vietnam and China!

Saturday, January 19, 2008


The reason I've been sloth in posting on this blog (no posts in December!!) has been that I've been on a long vacation, the highlight of which was terminal Blackjack addiction in Las Vegas, not only for me but also my otherwise wise wife! The paradox is that there are so many things to blog about, that I probably wont be able to write about even one of them.

But first here's wishing everyone a very belated and very happy new year!

On Jan 1 2007, I had made 3 resolutions, which were pretty fundamental. They involved desired changes in my weight, career, and marital status. By a huge coincidence and massive doses of luck, I was able to fulfil all of them (alas, a few only temporarily!!). This hugely encouraged me to make some resolutions for this year as well, and I have given this matter some desultory thought over the past couple of weeks. Unfortunately, I was unable to come up with very fundamental resolutions, which I could keep. So here are some relatively light ones, which I will document here, and judge my performance against at the end of 2008:

  1. Limit alcohol intake to once a month (wine not included here since I usually dont swill wine uncontrollably)
  2. Wake up early (i.e. early for me - 6:30 am) each day
  3. Contribute significantly to charity at least twice in the year
  4. Learn a new activity - either Karate or some form of dance
  5. Push myself harder professionally

Would be good to hear about your resolutions as well!

Thunder pe Wonder

Q: If Agent Vinod, Gunmaster G-9 and Agent 116 (hint: these are NOT fictional characters!) came together to save the country from an attack by giant locusts, what would their war-cry be?

A: Thunder pe Wonder!!

Couldn't stop laughing once I read this article (thanks to Mint)

Excerpts here:

The first desi Bond was Jeetendra in Farz (1967). Gopal or Agent 116 of the Indian Secret Service was still quite a homeboy, with his remarkable exclamation, “Thunder pe wonder”, and his white trousers. He meets Sunita (Babita) in the course of investigating the death of another agent and finds that the trail leads to Sunita’s dad.

The next year, we had Sailesh Kumar, who played a spy in Goldeneyes Secret Agent O77 in 1968. If you do not remember who Sailesh Kumar was, don’t let it worry you. No one else does.

This was followed by Agent 999 Operation Jackpot in 1972. Perhaps these flopped badly for it took a while for Rajshri Productions to start Agent Vinod, played by Mahendra Sandhu, which they released in 1977. The story established a pattern that almost all the others were to follow. A scientist (Nasir Hussain) is kidnapped. The government sends in Agent Vinod, who is helped by the daughter of the scientist (Asha Sachdev).

The only James Bond knock-off to be a hit was Suraksha (1979), in which Mithun Chakraborty played Gopi alias Gunmaster G9, with M played by Iftikhar at his school-masterly best. Suraksha’s most memorable moment was a graveside sequence. One of the Indian intelligence agents, Jackson (Suresh Oberoi), has been killed by the nasties. When the Indian intelligence agencies dig him up, they find pieces of plastic in his grave. Some uncredited extra utters the immortal lines: “Sir, ispe to plastic surgery kiya gaya hai (sir, he has had plastic surgery).”

Director Ravikant Nagaich tried to recreate the glory of Suraksha with Wardat two years later, in which Gopi came back when the nation was under attack from large locusts—but it flopped. Trade pundits opined that this was because Indian audiences could not take the idea of Gunmaster G9 being unfaithful to Ranjeeta, the heroine of Suraksha, since Kaajal Kiron was now playing the daughter of the kidnapped scientist and the G9 girl. It might well have been that it was just a very bad film.