I'm very pissed...

...with my bank (hypothetical situation). What do I do?

I ask the bank for compensation for my ire.

How much? One lakh? Ten lakhs? One crore? Hundred crore? One million crore?

Or a sextillion? (i.e one followed by 21 zeros)?

Not enough? How about ten sextillion?

Yeah! that sounds good! Ten sextillion then, is what this gentleman decided!

To call this absurd is akin to saying that Mallika Sherawat is ugly. i.e. highly understated!!!

When melancholy strikes...

...one remembers some old time poignant movies. E.g.

1. Ijaazat: The story of a couple and how they discover each other when its too late. For the story click here
2. Parinda: The story of two brothers and how fate intervenes to tear them apart. For story, click here
3. One of the all time greats: The English Patient. Lyrical, forbidden love which is doomed. How humanity transcends nationality. Story here
4. On the Waterfront. I could'a been a contender. I could'a been somebody! Story here

The common theme running in these classics is that of loneliness. Terrifying, slow loneliness. Attractive, alluring loneliness.

Very good interview

To complete the troika of bad, good and best, here is the final quote from the same website (but a different analyst):

Q: What do you do now for someone who has been left out in this rally for the past couple of months?

A: Conventional wisdom would suggest that as more and more people who have been left out get frustrated, they get sucked into the market and when the last of them gets sucked in that is when this market will break. Having said that, for me it has been a period of frustration, we are now less in cash than we were earlier much against my better judgement. We are clearly not looking at new ideas, at new stocks but adding a little bit to existing stocks in the midcap space which were looking cheap earlier, which are still looking cheap. My fundamental sense still tells me that there are too many dichotomies in this market, in this purely liquidity led. On the one hand you have consumer price inflation running away with itself but nobody believes that interest rates will go up. Commodity prices are heading higher but nobody believes that global economic recovery will suffer. The world has been through its worst economic crisis over the last twelve to fifteen months but everyone believes that the worst is over. The party is now well and truly on. I don’t think we are going to find too many people coming onto your channel and saying the next band is down. Everyone is saying that the next band is up and rightfully so because a lot of levels have been taken out. But this is a dichotomy. China is another huge imponderable here, three or four months ago, everyone was saying that Chinese growth will bailout the global economy but today China seems to be slowing down. But the view of the world has not changed. It is like one should not worry about China, everything will be fine. It is like the question you asked about the monsoon a little while earlier. The monsoon has not recovered but one should not worry, everything is fine, this market will go up. So that is the mood and it is the liquidity that is driving this mood and who are you or I to buck that trend.

And this is how it should be done...

This is a different guy on the same question:

Q: What about Tata Motors, can the current price be justified? Are you revising your price targets there?

A: Fundamentally, it’s difficult to recommend buying Tata Motors at these levels. First of all the biggest chunk of revenue at about 65-70% still comes from JLR which is geared to the US and Western European markets. That revenue and earnings stream remains quite unpredictable so there is this huge degree of variability in the earnings forecast for Tata Motors. With that kind of a risk I think, these valuations may not be justified at the current levels. In the auto’s side, there are far better opportunities which have a far steadier earnings stream and a lesser degree of risk associated with the business which one can buy. It’s difficult to recommend a risky earnings stream at high valuations at this point in time.

This is a decent answer - the guy talks about headwinds for the company, says that financial performance is difficult to predict, and that a risky earnings stream trading at high valuations is not to be recommended. Anyone who buys after this knows that she is taking a pure punt. This is what a good analyst should do.

What is bullsh***ing 'analyst'

Just read this 'expert' on business channel CNBC's website. I quote:

Tata Motors a good buy?

Betadpur said, it was difficult to figure out a valuation for Tata Motors. “We have looked at the street estimates. It is all over the place as far as earnings per share (EPS) for 2011, our own numbers are around Rs 20 and we can give it a 30 multiple and that gives you Rs 600 - 30 multiple seems a little too much but that is where we are. If we say everything goes well for the stock, Jaguar-LandRover picks up by 2011, that is generating a lot of cash flow for the company and the EPS goes from our current estimates 20 to 30 and then you give it a 30 multiple, you get to Rs 900-1,000 target. That is what some people on the street are saying that Tata Motors can get to Rs 1,000. That is how we believe on the numbers but I don’t think everything is going to go positive for this company. “

What a jerk!!

1) He is not saying anything

2) He is not even providing any justification for his dumbass arguments - why should it trade at 30 times? What will make EPS increase 50%? Cash flow does not equate EPS. So what specifically will make EPS rise? What about the debt overhang? What about historical valuations?

Jokers like this really get my goat. And what business does CNBC have putting such brain-dead pretenders on air? The irony is that about 20,000 people would have read this and will call their brokers tomorrow with orders to buy Tata Motors, saying they have heard (on authority) that it will soon touch Rs 1000!!

They deserve the slaughtering they are going to get!

PS: I have nothing against Tata Motors. I think they make damn good SUVs!!

Mo' on co-bro

Suggestions from Icon-o-blast:

Coveted brother

Colossal brother

Concocted brother

Convoluted brother

Constipated brother

Conundrum-like brother

Follow up from me:

Contrarian brother

Copulating brother

Desi English?

Heard today - "He is my co-brother".

wtf??

What is a co-brother? Is it a shortened version of cousin brother? In that case why no co-bro? Or is it colleague who is thick as a brother? I was bursting to ask, but politely nodded in sage understanding instead.

Ah, the eternal mystery of life!

To no purpose...

Bored and missing the wife (she is off to her parents for a few days), I sit brooding about the general direction of my life. Office occupies roughly 70% of my weekdays, but I find work and office trivial and trite - it strikes me as funny to see other people make the same mistakes as I did and not get penalized even a tenth. I no longer feel rage at the unfairness of it all. I just look at it as a chore that I must finish - the results do not interest me.

Movies and entertainment bore me. Of the dozen or so movie channels that I see on my overpriced DTH satellite service, I can find exactly zero that are playing movies of any interest. The less I say about the trash broadcast on the general entertainment channels the better - if I were dictator for a day I would just ban the whole lot of them (and throw their content directors into dungeons to boot). Ekta Kapoor would be tortured and then exiled forever.

I have finished reading the Perry Mason that I've put off for close to a week, and I dont feel like getting started on George Soros' new book. It looks ponderous and preachy, and I'm not in the mood for that.

I dont feel like researching any stocks. I have run out of money to bung into the market.

I cannot do household chores - it is not efficient for me to do so now. I cannot run the washing machine since the clothes line is full of wet clothes. I cannot run the dishwasher since it does not have a 100% load. I have heated and eaten dinner, made and drunk tea. I have had a couple of chocolates. Nothing more for me to do.

I dont feel like browsing the internet. I will visit the same sites again and again.

I feel like speaking to a few friends - but they are probably asleep at this hour.

Life certainly seems pretty empty right now! I need a hobby.

(I enjoy writing this blog though! Finally!!)

You scratch my back I'll scratch yours

The Business Standard carried this op-ed piece yesterday. It brought to the fore what one already feels in one's bones - we are a nation of insidious insiders. We operate on the philosophy of you-scratch-my-back-i'll-scratch-yours; justice, national interest and fair play be damned. Sample this
- we have 55 billionaires for every trillion $ of gdp (more than the US, approx. 3 times Germany and approximately 3.5 times Brazil). The only country that exceeds us is Russia, and we all know that that country is run by crooks.
- the fact that most (27, to be exact) of our elected 'youth' politicians are the sons / daughters / nephews or brothers-in-law of other politicos.

The article in question raises some probing questions into the national soap opera being played out right now - the ugly saga of the 2 brothers - and its repercussions on national energy security. Had it not been for the younger brother being peeved (and rightfully so, in my opinion!) with not getting what was promised to him, no one would have raised some pertinent questions on the way the gas - a national resource - is being priced.

The way the contract works is quite simple - the gas belongs to India, and the contractor (RIL in this case) is compensated for the capital expenditure incurred and operating expenses in extracting the gas via a revenue share on the gas sold. Obviously, the contractor has an incentive to pad capital costs, since this enables recovery of more revenues from the government. This conflict is supposed to be contained via a review mechanism where a 4 member committee approves the capex. Now, the fact is that the capex per cc of gas DOUBLED in 2 years (from 2004 to 2006) . The 4 wise men who stamped this were found to be related (indirectly, of course) to RIL and sister concerns. The government's independent verifying arm, the CAG, has publicly said that it has not been given access to the contractor's data for the last 18 months, despite asking for it repeatedly!

If this is not bad enough, the oil ministry is siding quite openly in the legal process with one side of the litigants. While there is nothing wrong in this, the rub comes here - it is also openly hurting the interests of NTPC, another national company and our largest power producer. The country’s top law officials, the Attorney General and the Solicitor General have openly criticised Deora’s ministry for having hobbled the public NTPC from pursuing its legal battle against RIL.

It is not my case to take sides in the gas dispute - legality aside, it seems to me that the national interest would be served better by NOT honouring the contract between RIL and RNRL. However, I do think that we need a lot more scrutiny and a lot more transparency to prevent India from turning into another oligarchic banana republic.

Ferozeshah Kotla

Early one morning, a few of us landed up at the ruins of the citadel of Ferozeshah in New Delhi. Some pics (courtesy Anjaani Manzil):

Excerpts from Poe

`Prophet!' said I, `thing of evil! - prophet still, if bird or devil! -
Whether tempter sent, or whether tempest tossed thee here ashore,
Desolate yet all undaunted, on this desert land enchanted -
On this home by horror haunted - tell me truly, I implore -
Is there - is there balm in Gilead? - tell me - tell me, I implore!'
Quoth the raven, `Nevermore.'

`Prophet!' said I, `thing of evil! - prophet still, if bird or devil!
By that Heaven that bends above us - by that God we both adore -
Tell this soul with sorrow laden if, within the distant Aidenn,
It shall clasp a sainted maiden whom the angels named Lenore -
Clasp a rare and radiant maiden, whom the angels named Lenore?'
Quoth the raven, `Nevermore.'

Probably true! This is as good as it gets.

Bashing Goldman Sachs Is Simply a Game for Fools: Michael Lewis

From the moment I left Yale and started working for Goldman Sachs, I’ve felt uneasy interacting with those who don’t.

It’s not that I think less of Goldman outsiders than I did while I remained among you. It’s just that I feel your envy, and know that nothing I can do or say will ever persuade you that I am no more than human.

Thus, like many of my colleagues, I have adopted a strategy of never leaving Goldman Sachs, apart from a few brief, spasmodic attempts to make what you outsiders call “love” or “the beast with two backs.” Goldman recognizes how important it is for its people to replicate themselves. We bill no performance fees for the service.

Today, the sheer volume of irresponsible media commentary has forced us to reconsider our public-relations strategy. With every uptick in our share price it’s grown clearer that we who are inside Goldman Sachs must open a dialogue with you who are not. Not for our benefit, but for yours.

America stands at a crossroads, and Goldman Sachs now owns both of them. In choosing which road to take, ordinary Americans must not be distracted by unproductive resentment toward the toll-takers. To that end we at Goldman Sachs would like to dispel several false and insidious rumors.

Rumor No. 1: “Goldman Sachs controls the U.S. government.”

Every time we hear the phrase “the United States of Goldman Sachs” we shake our heads in wonder. Every ninth-grader knows that the U.S. government consists of three branches. Goldman owns just one of these outright; the second we simply rent, and the third we have no interest in at all. (Note there isn’t a single former Goldman employee on the Supreme Court.)

What small interest we maintain in the U.S. government is, we feel, in the public interest. Our current financial crisis has its roots in a single easily identifiable source: the envy others felt toward Goldman Sachs.

The bozos at Merrill Lynch, the dimwits at Citigroup, the nimrods at Lehman Brothers, the louts at Bear Stearns, even that momentarily useful lunatic Joe Cassano at AIG -- all of these people took risks that no non-Goldman person should ever take, in a pathetic attempt to replicate Goldman’s financial returns.

For too long we have allowed others to emulate us. Now we are working productively with Treasury Secretary Tim Geithner and the Congress to ensure that we alone are allowed to take the sort of risks that might destroy the financial system.

Rumor No. 2: “When the U.S. government bailed out AIG, and paid off its gambling debts, it saved not AIG but Goldman Sachs.”

The charge isn’t merely insulting but ignorant. Less responsible journalists continue to bring up the $12.9 billion we received from AIG, as if that was some kind of big deal to us. But as our CFO David Viniar explained back in March, we were hedged. Our profits from AIG “rounded to zero.”

People who don’t work at Goldman Sachs, of course, find this implausible: How could $12.9 billion round to zero? Easy, but you just need to understand the mathematics.

Let’s assume AIG transferred $12,880,560,250.34 of taxpayer money to Goldman Sachs. A Goldman outsider, asked to round this number, might call it $12,880,560,250.00. That’s not how we look at it; at Goldman we always round to the nearest $50 billion, so anything less than $50 billion rounds to zero.

Think of it that way and you can see that $12,880,560,250.34 isn’t even close to not rounding to zero.

Rumor No. 3: “As the U.S. government will eat the losses if Goldman Sachs goes bust, Goldman Sachs shouldn’t be allowed to keep making these massive financial bets. At the very least the $11.4 billion Goldman Sachs already has set aside for employees in 2009 -- $386,429 a head, just for the first six months -- is unfair, as the U.S. taxpayer has borne so much of the risk of the wagers that generated the profits.”

Really, we don’t know where to begin with this one. It is wrong-headed in so many different ways!

Let’s begin with the idea that the taxpayer is running a bigger risk than we are. The billions he stands to lose are trivial; after all, they round to zero.

The real risk, when you think about it even for a minute, is the risk we take ourselves: that Goldman will cease to exist and we will cease to be Goldman employees. To flirt with such tragedy we obviously need to be paid.

Rumor No. 4: “Goldman employees all look alike.”

Several recent newspaper photos have revealed that a surprising number of Goldman Sachs workers are white, male and bald. That non-Goldman people glance at such photos and think “Holy crap, they even look alike!” just shows how deeply anti- Goldman bigotry runs in American life.

We at Goldman represent unique clusters of DNA; if we bear some faint surface resemblance to one another, and to creatures from the 24th century, it is only because our superior powers of reasoning lead us to hold in our minds exactly the same thoughts, at exactly the same time.

A shared disinterest in growing hair, for instance, isn’t a coincidence of nature but an expression of healthy like- mindedness.

“The world is a pool table,” our naked-headed CEO likes to tell us. “And all the people in it are either stripes or solids. You alone are the cue balls.”

Rumor No. 5: Goldman Sachs is “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

Those words are of course taken from a recent issue of Rolling Stone magazine and they are transparently false.

For starters, the vampire squid doesn’t feed on human flesh. Ergo, no vampire squid would ever wrap itself around the face of humanity, except by accident. And nothing that happens at Goldman Sachs -- nothing that Goldman Sachs thinks, nothing that Goldman Sachs feels, nothing that Goldman Sachs does --ever happens by accident.

(Michael Lewis is a columnist for Bloomberg News and the author of “Liar’s Poker,” “Moneyball” and “The Blind Side,” soon to be a major motion picture. The opinions expressed are his own.)

Sona

Was randomly surfing youtube, when I chanced upon an old favourite. One thing led to another, and I figured that this is a very talented and cute chick:

80% pass

Everyone and their uncle in the media are running around hoops on how the budget is a 'missed opportunity', not so good etc. etc. I do not agree with this.

For one, the budget is what it was meant to be - a bald recital of the Government's accounts over the next year. It is not the place to make grandiose policy announcements, or to give punters a chance to pump up some stocks and dump others.

Secondly, it prescribes the right dose for India's ailing economy - fiscal stimulus (albeit directly in the hands of the consumer). I felt the removal of the tax surcharge was a really good thing (since the section affected by this is never part of any traditional vote-bank and thus easy pickings for all grasping politicos). It also removed another regressive tax - the FBT. And it committed to introduction of the most efficient goods and sales tax (the GST) from next year.

Third, the budget does not sugar coat any of the hard messages - fiscal deficit is going to be high at 6.8% of GDP (much higher if one accounts for the deficit properly), tax revenues are going to be down, and disinvestment is going to be a slow and tortuous affair, large doses of government spending is going to be required to shore up the rural economy. Were the manic punters bidding up our markets hoping any different? If so, they deserve what they got from the market.

A study in contrasts

Last week, I saw 2 movies - The Hangover and (I am ashamed to admit) Kambakht Ishq.
The Hangover is a really good movie - oddball, corny and really good for guffaws. The perfect weekend fare, intelligently written, well acted and perfectly paced. Kambakht Ishq, on the other hand, made me cringe in disbelief and embarassment.
How could anyone have

1. written this unadulteratedly regressive, stupid and intelligence-insulting script (if one can call it a script)
2. acted in such a vehicle and
3. spent millions producing it

These are true mysteries. There are no songs to speak of, the 'special appearances' are especially dumb, and this movie is a walking talking advertisement for how not to waste time. The movie is full of caveman cliches (the hero shuts up the heroine by smooching her, he can sleep with all and sundry but she has to be pristine, the 'friend' runs her life and marriage on the whims of her friend, the heroine's mother is at fault for her stuck up and tight arsed behaviour, the heroine realizes the folly of her wicked ways in the end - I could just go on and on!) that I just hated.

In fact, by writing about it, I feel I am somehow denigrating this blog. Rather extreme!!

Neemrana

Neemrana is a nice weekend getaway from Delhi - just a hundred kilometers away and good for a break in routine. It is essentially an old fort, which has now been restored and enhanced into a heritage resort. Some pictures from a mobile phone camera:

Ambiguity as sin

I read John Le Carre's most recent novel, A Most Wanted Man, entirely in a book store. As often before, I was enraptured by its tight plot, totally believeable characters and most of all by its sense of innate morality. It also had the old Le Carre characteristic - the good guys never win (unless it is Smiley - but then Smiley was such a loser in life that he could be forgiven his wins).

As with his other truly memorable books, the story also disturbed me. Because it was so real, and because it probably happens so many times in this world we live in. I looked, perhaps for the first time, upon this world of ours from the point of view of a devout follower of Islam. And did not find it to be a safe or even reassuring world. Innocence is a sin, might is right and morality is a liability. The cruel logic of Guantanamo Bay overrides the human virtues of compassion and justice. We live in a world of justice by strength, justice of the winner, justice as fiat.

Usually I find Le Carre books morally ambiguous - everyone has a point of view which can be understood, Smiley or Karla. But not in A Most Wanted Man. Sometimes ambiguity has to be recognized as what it is - a sin. Something is right, and another thing is wrong. And one has to do the right thing. The right thing is humanity and compassion.

As a character in the book says - five percent of him was bad. But if I look at myself, can I say the same? For me, its probably closer to fifteen. Or even twenty. This is as true for me or you as it is for the character. Recognizing this, and making allowance for it - this is what will make life better for all of us.

Interesting analysis

This post comes from material posted on Yahoo! finance

Professors Barry Eichengreen (Berkeley) and Kevin O'Rourke (Trinity) have produced a great series of charts that compare the progress of this worldwide recession with the Great Depression of 1929.

Effects on world industrial output and world trade volumes are worse than the Great Depression of 1929!
The good news, however, is that equity markets the world over have been quick to price all this in, perhaps protecting us from the slow painful slide seen last time around (fast and painful, or slow and painful? i prefer the former!)
And add to that the massive (I mean MASSIVE) monetary and fiscal stimulus laid on by governments and central banks. Raises the hope that today's green shoots are really the oaks of tomorrow!!

Service economy? Ha ha

There are no two ways about it - our service economy sucks! Getting a broadband connection at home (this is the most premium plan, and with the 'best' operator) is proving to be a headache. This is after my earlier broadband connection would provide such terrible connectivity that I would find it quicker to use a data card on my computer!

This is not just about broadband, or even telecom. I don't understand why we do not have a good, professional service economy. Where if I am told that xyz will happen on a certain day, it does happen on that day (or even that week)! This is true even of the largest retailer in India, who commits delivery on a certain day but actually delivers on some other day.

Earlier, this was a given - because everything was Govt. (or should I say bureaucracy) owned, and the Govt. certainly does not care about service. It is much more difficult to understand now - we have private companies with a profit motive, we have differential pricing, we have pretty much all elements in place for great service. But do we get it? Unfortunately, the answer is no!

My hypothesis is that this stems from 2 key factors - a) the chaos and unpredictability of daily life in our cities. I cannot predict to within 30 minutes the time it will take me to get from place A to place B, or whether I will find parking there, or whether the guy I'm supposed to meet or the item I'm supposed to collect will be there at all! In such an environment, even a small variable can effect output tremendously. Therefore service providers are unable to predict things themselves b) we are horrible at communication and are very short term thinkers. We think saying something conveniently now (Yes surely I will deliver today / Guaranteed madam, kaam aaj ho jayega) is enough to satisfy the customer, rather than say something not so pleasing, but then keep the promise. Ergo, we are short term optimizers rather than long term strategics.

Whatever the reason, our service economy sucks!

99

I recently came across the following (true) facts:

1. Statistically speaking, all girls in Delhi are called either a) Pooja or b) Neha
2. All taxi drivers in Delhi are thieves
3. Bhojpuri movies' 'dashing young heroes' are usually middle aged, balding and paunchy men
4. There is a thriving satta bazaar in Delhi
5. Mumbai goons have no chance against a) Delhi police and b) the Delhi chill
6. Cyrus Broacha is funnier in real life than in a funny role

All these were gleaned from a watching of the latest (and only in a long long time!) Bollywood noveau middle house cinema offering - to wit - 99.

The movie is a good timepass watch, entertaining in parts, and with good, believeable characters (except Soha Ali Khan as the eponymous Pooja, in a role so wooden that environmental enthusiasts will embrace her as worth preservation!). Mahesh Manjarekar, Vinod Khanna, Boman Irani and a really good guy called 'Kuber' provide solid performances. The scripting is good, and the situations (while over the top) are believeable.

Definitely worth a dekko.