Showing posts from 2008

The current economic scenario and its impact on the services sector

This is an article, that I intended to publish in a magazine, but simultaneously putting it in my blog. it contains the list of all industries that constitute the services sector and the impact of the economic recession on them

Layoffs, Deflation, Unemployment, Reduced Growth rates, Poverty and the list go on. Needless to say, the current economic scenario is a tough time for all the players involved in the system. Services sector contributes close to 60% of our annual GDP and hence the impact on this could mark a death knell to the high growth rates of our country. Impact assessment of service sector includes the assessment on all of its disparate activities; a macro level analysis is done on the same with emphasis on some of the major ones.

1.Trade: Need less to say, with the burgeoning crisis is because of the decreased trade amongst the various business entities. The recession in the developed world has reduced the exports. Companies and banks are not willing to extend credit to ea…

Neighbour's envy owner's pride

Suddenly the transformation in the Pakistan military and the militants in its country is quite unexpected and a welcome news for that country.

Post Mumbai blasts, the major militant groups in the western and the southern provinces of Pakistan have offered a cease fire to Pakistan Military. And guess what, Pakistan Military seems to be inclined towards it, and hailed some of the most wanted of those "militants" as Patriots.

Before the blasts all these people remained the main accused in the assassination of the Benajir Bhutto, x-prime minister of Pakistan. And all the militants who were accusing Pakistan military for their alliance with USA have suddenly extended their solidarity to the same military and also are shovering the military with praises saying that it is very patriotic.

The sudden act of comradery can be perceived as an indication that one of the parties played a major role in the Mumbai blasts and the other party is appreciative of that effort.

These are inte…

Where does it lead to

Next what??

The militants will be killed...Most of the hostages will be rescued, and we will forget the fact that Shivraj patil is useless until the next incident happens...

And we will also ignore Mr. Raj Thackeray's lack of leadership qualities during this time of crisis. And we will continue to remain the same.


Oops..It is not Same...It is SHAME

What is the course of action for the country? The PM has already blamed the neighbour, though our own people in the form of militants within the country are going to be eventual culprits.

War on the neighbour...No, pleeaaaaaaaaaaase? Yes, I will be consindered as a weak hearted person, but an outright war on a sovereign nation where the people do not hate, but only are under the mask of perceived hatred is not the solution.

Infact, we should go out on war against the militants.. Even Pakistan is not in a poistion to take away the Taliban and the AL-Qaeda from its hideouts.

Prepare a joint force and eliminate every islamic militant from …

Single digit inflation…good news or bad news??

In the amidst of all the good news, there is a silver lightning in the form of the news that the inflation has finally reached single digits. For the last week, the inflation came down to around 8.5% from around 10% in the previous week.

But is it really a good news? I think this is more of a warning of the forthcoming.

With a drastic decline in the IIP growth rates, and the average money available to people it was but pertinent that the inflation would come down.

But I think this is eventually leading to a deflationary trend. If things happen at the same pace as they have been happening, there is every chance that deflationary periods will be looming around in no time.

Consider this in the upcoming months:
a) Production decreases
b) Exports go down
c) Affordability of people go down
d) Fuel prices go down
e) Money available to people goes down
f) Negative perceptions towards the economy increases
g) Will not speak much about the exchange rate. It may remain the same or depreciate further, let&…

Extreme Currency

The first thing that one can observe after a series of very high inflationary periods is, higher denominition notes.
Recently Zimbabwe launched 100 million zimbabwean dollar bills owing to the very high inflation which is hovering around 165000%.

Imagine the situation, where each loaf of bread costs around 16 million zimbabwean dollars. The currency depreciation made the currency trade at around $1 = 200 million zimbabwean dollars.

This lead me to a search for the world's largest denominition bills:
To begin with,
a) The largest denomination banknote ever officially issued for circulation was in 1946 by the Hungarian National Bank for the amount of 100 quintillion pengo, (100,000,000,000,000,000,000, or 10 to the power of 20).

The Post-WWII hyperinflation of Hungary holds the record for the most extreme monthly inflation rate ever — 41,900,000,000,000,000% (4.19 × 1016%) for July, 1946, amounting to prices doubling every fifteen hours!!

b) Largest bank note with zeroes was in Yugoslavi…

Only god can remove me from the power, not britain or any one else

Couple of weeks ago I said these statements in a rally.

Guess who am I?

Iam running the country for the past 28 years, after some heroic efforts.

In all these years of rule I hardly did anything for the economy, but I've ensured that I had all the luxuries.

Now Iam 84 years old, but still Iam eager about power.

Because of lot of international pressure I agree to conduct elections...My main opponent is a trade union leader and has been the strongest critic of mine for a long time...looking at the situation I predicted that it might be a landslide win for the opponent, so I went ahead and started annihilating all the supporters of the opponent party.

I even scared the people who were willing to vote to the opponent member.

In order to act as a mediator I invited the prime minister of the powerful country in the continent, who is the only supporter of mine and ensured that any troubles are overcome.

In spite of all the efforts, in the elections held in March' 08 I lost the elections. I …

Petrol price hike: Increased arbitrage for committing crime

"Lets not burden our children.." these are the quotes of Mr. Manmohan singh after the fuel price hike declared yesterday. It is a basic common sense that all the oil companies will be dead without these price hikes. Not that these price hikes will lift them from the deep losses, the amount of direct subsidies atleast will come down.

The imminent affect of the fuel price hike will be felt by the normal consumer is two ways:
a) The increased price per litre
b) The quality of the fuel

One may wonder, how does increasing the fuel price hike affect the quality of the fuel. Because, the increase in the fuel price hike occurred on Petrol & Diesel but the prices of Kerosene remain UNTOUCHED. The arbitrage value can be understood from the below graph.

This will provide more impetus to the petrol aduleteration whose victims are the millions of vehicles, the environmental pollution and the famous Mr. Manjunath of IIML who was brutally murdered because he suspended the license of petrol…

Water: Tibet and China

This title has got no relation with the movie Water :)
I guess one would have already guessed what I intend to speak...It is about China's strategic interest in Tibet....WATER
There is already a saying that the future wars are not likely about oil but about the basic requirements of food and water.
I was trying to understand the reasons China would be so interested in Tibet...Agreed all the countries are bent upon acquiring as much geographical area and hence as many natural resources as possible, but Tibet especially stands in a very strategic location.
1/3rd of the World's population directly or indirectly depends on Tibet..Guess how?
Almost all the big rivers in Asia originate from Tibet, be it the Yangtze or the Yellow River or the Brahmaputra or the Indus or the origins of the Ganges all take its roots from Tibet.
This is the image showcasing the rivers around Tibet:

The Yangtze river alone is such big and has such huge potential that the world's biggest dam is on the river …

The democratic recession, Friedman

There was an interesting artcile by Thomas.L.Friedman, The World is Flat guy.... He quoted that one of the other depressions that the world is facing is democratic depression. He quotes that the economic freedom decreases with the increasing oil prices.
It is certainly vis-a-vis the countries like Russia, Venezuela etc. who are oil exporting nations but are not under democracy.
The article arose certain questions...
But is democracy a matter of concern now? Is china a democracy with hardly any press freedom or verbal freedom? In the countries who boast about their democractic standards what are the achievements received?
I may sound a communist, but Cuba has acheived somethings like near 100% child nutrition, education for every child etc. that most democratic biggies could not acheive?
So, what is so significant about democratic recession?
There are countries which are certainly sending grotesque examples like the Zimbabwean president, who has ensured that the elections become void..sound…

One more on housing crisis in US

The genesis of sub prime-crisis is the riskier credit policies provided for the housing sector in US. Considering the existing situation, I wanted to know what is the situation prevailing in US regarding the housing scenarios

As can be seen from the above image, the housing prices in US have been steadily increasing until 2005. It took almost 3 decades for the prices to reach the 1975 level. But since 2005 the decline has been so steep that in less than 3 years the prices have reached levels below the 1970 prices. In the fiscal year 2007-08 alone the prices have declined by more than 15%.

With this steep decline, the amount of investment that goes into the housing sector has obviously reduced a lot. This is reflected in the graph below:

As can be seen above the decline in the investment in the housing sector has decreased by around 25% and that the contribution of the housing sector to the GDP has also declined drastically.

This in turn means that the employment in that sector has decrea…

Missile shield

There is a saying at our place that one is not able to take care of himself, but has started to protect the neighborhood. But it would be ironical if the neighborhood agrees that he can take care of them.

Similar situation happened with European Union and US. Rather, I should say, US is pushed into this deal by Mr. Bush who has had a terrible 8 years of near deplorable foreign relations. US wants to keep a missile shield over All the NATO countries as a protection to any future attacks. Earlier the EU wasn't convinced about it, but under the existing circumstances, where US makes everyone believe that Iran may attack, eventually EU fell for the trap and approved the defense shield.

I bet that most of the contracts for the defense shield will be awarded to US companies, and since US is heavily dependent on the performance of their military, this will certainly prove to be beneficial to their economy which otherwise is in doldrums.

It would be interesting to see how Russia and especia…

Two INs

The Two INs stand for INflation in INdia

The article was an attempt to answer how does India calculate inflation? And how is it calculated in developed countries?

India uses the Wholesale Price Index (WPI) to calculate and then decide the inflation rate in the economy.
Most developed countries use the Consumer Price Index (CPI) to calculate inflation.

Wholesale Price Index (WPI)

WPI was first published in 1902, and was one of the more economic indicators available to policy makers until it was replaced by most developed countries by the Consumer Price Index in the 1970s.

WPI is the index that is used to measure the change in the average price level of goods traded in wholesale market. In India, a total of 435 commodities data on price level is tracked through WPI which is an indicator of movement in prices of commodities in all trade and transactions. It is also the price index which is available on a weekly basis with the shortest possible time lag only two weeks. The Indian government has…

Miscellaneous-the first of many more

Three months, exactly after which I came back to my homeplace...Big deal again:)..
It doesn't get nostalgic for me, but still the feeling back of coming back to home makes you feel happy.
On my way back iam presently going through this region called as Telangana the dry area of my state. It has many fields, but the interesting part is many of the fields are cotton fields.

Iam within 100 kms from Hyderabad, the capital city of my state and one of the most happening cities in India, but the villages still donot seem to have any effect of the development happening around the cities.

it is close to 6:30 am now and even the dry parts of the region look pleasant and liveable. 2-3 more hours will bring the scorching sun to its peak and the pleasant environment will turn into a very hot, dry place with no water and power. The farmers are supplied power during the wee hours of morning and for couple of hours in the evening.

I guess those few hours are enough for those farmers, nevertheless i…

My more witness of war crime

On 16th march 1967, during the vietnamese war American soldiers demolished one of the villages in vietname "My lai".
My lai massacre has been one of the most gruesome incidents of the Vietnamese era.
Hundreds of villagers including women and children were brutally raped/murdered.
Before the attack on the village the instructions to the American troops was that any moving being to be considered as enemy and to be shot dead without any discrimination.
The justification given by the commander in charge of the troops was that he was following the orders from the top and that he wasn't guilty of the murders committed.

The incident itself came to light a year later because of the bold inspection by one of the American soldier himself who heard it across from the mouth of one of the other soldiers who boasted about the incident.

16th March earmarked the 40th anniversary of the massacre. The survivors still remember every moment that happened. One of them could survive because she wa…

China..reason for inflation in US :)

Looks like the new year has proven to be a nightmare to the rulers of china.
It all began with the severe snow, the worst in half a century which literally brought the whole country to a standstill...More than 3 million passengers were stranded in a railway station...

After the storm settled down, another storm has hit the ruling party....

the storm of inflation...It rose to close to 8.7% the highest in the past 12 years.

All these in the year of the olympics where China wants to showcase its prowess in all aspects.

The country which was defying all the laws with its continued double digit growth rate for more than a decade seems to be faltering on the front of ensuring the survival of many of its citizens who are starving to death due to the roaring prices.

No longer is one country's inflation its own problem. When it comes to the likees of the exports that China does it becomes a global problem, because the chinese products would no longer remain cheap causing the ripples across the …