Tuesday, January 29, 2013

Subbarao blinked finally - 1

The tug of war between government and RBI ended today as RBI governor D.Subbarao conceded by lowering the Repo rate by 0.25 even CPI is over 10% and WPI is over 7%.   Whether it is pressure, threat, coax, cajol or whatever from Chidambaram, governer obliged with the rate cut and this is not at all good for the common man. Subbarao ditched the common man for real estate mafia.

. Normally with every review RBI used to talk about inflation only. Now they understood this is not only about inflation. The mismanagement started affecting CAD and Rupee value also. One need not to be economist to understand all this basic things. Interestingly they seems to read my blog and wrote something about the fall in the savings rate in India.  RBI included all these things in their review. But instead of raising the interest rates they reduced.

Now let us see what would happen next:

1. As I have been maintaining, the 0.25% is not going to save the ass of corporate mafia. The real estate mafia has to pay for the sins. I do not think any body would go and buy apartments or flats only for 0.25% or 0.50% rate cut. People should have real money or jobs. With new jobs are hard to come by I am not sure.

2. A well known Bangalore builders defaulted in corporate debentures. Hopefully a start is made. I love to see at least 50 medium builders to bankrupt to start with. These idiots are thinking they have land bank which is valued more than the loan amount. .They value all these land banks at CMP at which rate nobody buys :) so I don't believe their price. Let us see how the creditors get back their money.

3. Chidambaram has placed all his cards on the table and forced RBI also to put their best foot forward. Since they cannot do anything more to pep up, I think they will run out of steam.

Wednesday, January 16, 2013

All problems solved now - expect rate cut

The week gone by was very interesting.

A lacklustre result from Infosys caused the share price to jump above 20% in a matter of couple of days. Ironically this company is on the downhill.

The WPI inflation of 7.2 % is greeted by market although the CPI inflation of over 10%. Everybody discounted the rate cut by RBI. Now it is the question of whether it is .25 or .50.

Mangomen in the street is made to believe that it is in his best interests the rate cut is going to be done. Because government thinks every mango man in the street is invested in stocks and real estate. The mangomen who are not invested in these two assets classes are not having a say  in government policies and officially raped by Indian government. Sadly majoirity of population falls here. So effectively Indian government is working against majority of its people.

Now coming back to RBI, Subbarao would have realised how dangerous it is to commit to rate cut on a certain date. Now he has fallen into his own trap and will be forced to cut rates January end. And here after every review he will have to cut rates to stock growth. How pity?

Thursday, January 10, 2013

are we there already??

Now the government suddenly woke up and try to make correct noises. After allowing the inflation to run amok through the country for the past 3-4 years, virtually spoiling all the economic parameters government  is now trying to do damage control.

  • up to 20% fare hike in railways.
  • There will be huge hike in diesel ( That is what they say, finally if it comes 2-3 Rupees, we mango people will he happy, they knew that)

Now coming back to our favorite doomsday scenario, I see increasing symptoms for crash now:

1. Car sales growth is down to 2008-2009 level. Since this time, the slowdown is much more broad based I am sure it will go to negative in 2013. Some of the car companies may shut shop and go out from India.

2.  IT companies are not doing any mass campus hiring like previous years and planning to do some   namesake campus hiring only. Pipeline of business is not too great.

3.Since government is trying to augment resources at every level, ( tax hikes are possible) people will not spend much.

4. Real estate brokers ( brokers includes banks) cannot expect robust growth this year. I think 2013 may be the bust year for real estate

5. Stock market is gonna to crash which will bring real estate down with this. This year it would be interesting to see the sellers only market without any buyers both in shares and real estate. Stocks are already showing initial signs of reversal.

6. With Rupee at 55 against USD, if rate cut comes, it is not gonna to do any good to the government or RBI's reputation. Let RBI takes a decision. But for doomsday scenario whether rate cut or not, doomsday is gonna to come

7. With no new job openings, with no new avenues to make money ( we sold all natural resources already), and without any wage hikes how can we float ponzai schemes such as real estate etc?

Sunday, January 6, 2013

Comedy by Deepak Parekh

Just like the comedy episodes by Godrej, now Deepak also trying his hand. Remember this dude is the chairman of world's most valued bank. This bank is one of the 'so called banks' which sucks the ordinary tax payers money by getting funds at cheap cost due to governments policies. We will talk his credentials later.

For the week he was seen telling ' If India is downgraded, the western economies should be downgraded by several notches'

We will think about this little more:

1. First it is school boy mentality by Deepak asking to look others problems and not looking into your own problems
2. Current account deficit and fiscal deficit is growing alarmingly. So we have a problem. There is a saying ' see your back before commenting others'
3. Inflation has gone out of control partly because of the guys like Deepak who time and again come on broker channels to talk about the need to 'reducing rate'. Tomorrow if we go down, the same wolves will tell RBI could have done a better job.
4. Western economy problem is very different from India because of our population
5. Crony capitalism which benefits the corporate like Deepak is not in western countries.

Any takers??