Mr.Subbarao, Please stand up like a man in this once in a life time opportunity

The IIP figures are painting a dismal picture as expected in this blog.

The corporate brokers like godrej and Mafia like ICICI,AXIS and HDFC Bank all started next set of rheoteric for rate cut. Do you remember this same guys pitched for rate cut last month and after rate cut did not pass on the benefit to the end users? Ok. let it.

Now shamelessly they started crying for next rate cut. They are worried about their balance sheet and their bonus and not bothered about the aam aadmi who is struggling in this high inflation. My receipe to Mr.Subbarao is simple.

RAISE THE INTEREST RATE BY 2 PERCENT.

If you do this, with 6 months all the froths in the economy will be cleaned up. Allow the failed corporates to fail. Put a curb of dirty practice of loan restructuring by our own banks. There is a huge scam to be unearthed here.

Alas, our rupee dangerously nearing 54 will make things different to RBI.

(to be continued)

I pity RBI

I pity for them but this is not going to end so soon.

Increasing NRI rate upto 3% at one stretch is awful. They expect money will flow. I am sorry sir. They all knew INR will cross 60 very soon unless we prick some bubbles which are fanned and supported by your
bosses.

Subbarao must be wondering what went into him when he reduced the interest rates instead of raising.

The stock markets started their next journey down and this is going to be bumby. 

Very soon we will be grounded...

We are strange breeds.

When world over governments are fighting to control inflation, we are actually trying to increase inflation by cutting interest rates. We general public are are foolishly believing that we are getting richer day by day. Since most of us who criticize government already fallen into government trap by buying RE based assets at huge price we have no other option :(

One analyst expect dollar index to touch 86-88 soon. Now it is near 79-80. It is cool 10%. Now apply this logic upside down and calculate where INR would go against dollar. It is simple math dear. 60 Rs for 1 Dollar. I believe this theory and badly pray that this should happen. THIS WILL HAPPEN.

Now it is nearing 54. RBI cannot support as it already used it ammunition ( control on trading position) and the other ammunition (dollar selling) is risky as the country is running out of forex. Now what to do?

I have the solution. It is very simple. Eventhough your mind agrees, your heart won't.

1. Burst the RE bubble.

2. Declare sick companies as sick instead of restructure their loans

3. Increase tax on cars multifold

4. Go after tax evaders not only FII and also inland traders and industrialists. It is a shame that only around 4 lakh people are declaring that they earn more than 20 Lakh in a year in India. What a shame?

Do we have backbone?

FII's are blackmailing Indian government in GAAR issue.

Everybody knew that the mauritius route is being used to evade tax. When the government try to take on the evaders they resort to blackmail. Now  FII stop trading in Indian bourses ( well many of them). It is like a cartel and they openly challenge Indian government. They dont want to be taxed for the huge profit they make in Indian markets.

Now they are waiting for May 7th to know the government response for their virtual undeclared strike. I hope government show some spine and tighten the screws on this sharks. If they can invest in every other country by paying the necessary taxes why not here? Also it is rumoured these money are actually Indian black money re-routed. I think even if we tax all these mauritius firms also, after a knee jerk reaction they need to continue here as India is reasonably growing compared with others. They are just checking our endurance.

Let us see what govt is up to?

Are we fools?

It seems we are living in denial mode.

Wise men (no, no, not me!) are telling that some thing is wrong with our economy. We are saying many things are wrong with our economy. Yesterday S&P downgraded India outlook and it will not take much time to downgrade our credit rating.

We are counting on handful of reforms like opening up retail, DTC, diesel price deregulation etc to deliver. But problem lies elsewhere and nobody is ready to talk about that. Problem is inflation. Mindless money is being injected into the system to benefit a handful and this is hurting people. Reserve Bank though understand this but cannot do anything. We are obsessed with 9% growth rate.

If RBI can be armtwisted into reducing interest rates then god save the country. Just heard that the food inflation touches 9% and food prices heading higher. Next month we will see double digit food inflation and Mr.Subbarao will be forced to eat humble pie.

All the so called industry leaders, economists are talking as if nothing has happened. These guys in my opinion have sensex and nifty as their barometer to measure the performance of Indian economy. On the other hand our financial markets are fully dependent on FII money. These FII's even went to the extent saying that ' If you tax me, I will make you to pay, by failing your market systems', Interesting ha...

You can ask...Yes, china is cutting rates, Brazil does that...WE CANNOT because our Rupee value is going down, our import bill is increasing, crude is increasing...

HAPPY INVESTING GUYS..

Subbarao risks his reputation

Subbarao could not sit tight.

Now the new norm for RBI in inflation front is 7%. RBI could not withstand the pressure from the corporate mafia and 'big brother' government. Let us see how it would affect you and me.

RBI comes up with a meek explanation for rate cut saying that the core inflation reduced below 5. Now the core inflation is nothing but inflation minus food and fuel. Unfortunately in India inflation is decided only by these components. These are the components affecting people much. RBI has taken a western concept and justified their judgement.

Former RBI Governor S.S.Tarapore, IMF and many other independent analysts slams RBI for this decision. Let us see who will get benefitted?

1. Inspite of rate cut banks are reluctant to pass on the benefits. That means the 50 bps will not be translated
    into your loan EMI. We need to wait and watch.
2. It helps markets for a short time for sentiment booster.
3. It helps RE guys to try and sell their unsold inventory saying that the interest rate is gonna to reduce from
    here.
4. RE guys and other corporates who are heavily indepted to banks are not going to benefit hugely by 50 bps even when the banks  decided to pass on to them,

our CPI is well above 8%. Food inflation which was subdued during January due to base effect and seasonal effect rising its ugly face again. Rupee raises to 51.50 effortlessly. Congress losing in Delhi is a grim remainder that they cannot afford to take bold decisions.

By exhausting their arsenal, RBI cannot afford to cut the rates atleast for another 6 months minimum.

Interesting days ahead.