Wednesday, June 30, 2010
The End
This blog is now defunct. If anyone would like to take over please let me know I will transfer the blog ownership.
Thursday, March 11, 2010
Europe & Greece
With reference to the current European Economic crisis! It is indeed like studying Rock & Roll in a school where Paul Mc Cartney is the principal. The House of Finance (The place where our GBS is Housed) has the who is who of the Euro Economic zone) is Indeed fortunate to have as its President Prof.Dr.Dr.Otamar Issing.But I was indeed surprised to read his rather 'honest' view on Greece on the FT a week or so ago.Otmar Issing, was one of the fathers of the euro, correctly states the principle on which the single currency was founded in that.
I am sure you will agree with me and thanks to the Excellent lectures we had from our Macro Courses of Prof H as well as the Fantastic book that we had for the course on the AS AD + IS LM + ...... all the other 'pretty' Models, that The 'Building' all of a sudden doesnt look strong. A fully fledged currency requires both a central bank and a Treasury(Refer to the Last Question of our Final Exam in Macro) . The Treasury does not collect money from its citizens on an everyday basis but it needs to be available in times of crisis. When the financial system is in danger of collapsing, the central bank can provide liquidity, but only a Treasury can deal with problems of solvency.
The original construction of the euro postulated that members would abide by the limits set by Maastricht. But previous Greek governments violated those limits
The government of George Papandreou, elected last October with a mandate to clean house, revealed that the budget deficit reached 12.7 per cent in 2009, shocking the markets as well as its deep pocketed Profligate partners. The European authorities accepted a plan that would reduce the deficit gradually with a first instalment of 4 per cent, but markets said 'Naaaaaah'.
The risk premium on Greek government bonds continues to hover around 3 per cent, depriving Greece of much of the benefit of euro membership. If this continues, will there be a real danger that Greece may not be able to extricate itself from its predicament whatever it does ?
So Keeping this in mind is the bashing of Derivatives Traders(Ok I have a conflict of Interest here!)under the pretext that it is Indeed the derivaitves market namely the market in credit default swaps aggravating the whole situation ? (CDS They say is biased in favour of those who speculate on failure. Being long CDS, the risk automatically declines if they are wrong. This is the opposite of selling short stocks, where being wrong the risk automatically increases)
So now as a student not as a Derivatives trader I ask does Speculation in CDS drive the risk premium higher ? I would say no A well-organised eurobond market is the solution ! Ya Thats correct You need more Derivatives than what you have now !
Venkat
PS : I would really be curios to know Prof.H' Reaction to this Article of OI on this and the next time I bump onto him am just going to ask him!
I am sure you will agree with me and thanks to the Excellent lectures we had from our Macro Courses of Prof H as well as the Fantastic book that we had for the course on the AS AD + IS LM + ...... all the other 'pretty' Models, that The 'Building' all of a sudden doesnt look strong. A fully fledged currency requires both a central bank and a Treasury(Refer to the Last Question of our Final Exam in Macro) . The Treasury does not collect money from its citizens on an everyday basis but it needs to be available in times of crisis. When the financial system is in danger of collapsing, the central bank can provide liquidity, but only a Treasury can deal with problems of solvency.
The original construction of the euro postulated that members would abide by the limits set by Maastricht. But previous Greek governments violated those limits
The government of George Papandreou, elected last October with a mandate to clean house, revealed that the budget deficit reached 12.7 per cent in 2009, shocking the markets as well as its deep pocketed Profligate partners. The European authorities accepted a plan that would reduce the deficit gradually with a first instalment of 4 per cent, but markets said 'Naaaaaah'.
The risk premium on Greek government bonds continues to hover around 3 per cent, depriving Greece of much of the benefit of euro membership. If this continues, will there be a real danger that Greece may not be able to extricate itself from its predicament whatever it does ?
So Keeping this in mind is the bashing of Derivatives Traders(Ok I have a conflict of Interest here!)under the pretext that it is Indeed the derivaitves market namely the market in credit default swaps aggravating the whole situation ? (CDS They say is biased in favour of those who speculate on failure. Being long CDS, the risk automatically declines if they are wrong. This is the opposite of selling short stocks, where being wrong the risk automatically increases)
So now as a student not as a Derivatives trader I ask does Speculation in CDS drive the risk premium higher ? I would say no A well-organised eurobond market is the solution ! Ya Thats correct You need more Derivatives than what you have now !
Venkat
PS : I would really be curios to know Prof.H' Reaction to this Article of OI on this and the next time I bump onto him am just going to ask him!
Wednesday, January 6, 2010
BraaaaSill !
I had written on this very blog about what I learned on the Brazil Banking and why Marcos must help me find a job in Brazil(preferably near copacabana).
This is known as a Fundmanagers "parody" having a brilliant Idea but no money to invest on, yours truly obviously is in this category now :( ! however I thought I must discuss this EM market story. Tom had raised a very valid 'Fixed income view' on Govie Bra'(Read Brazilian Government Bonds) in his post.To which I had commented on the 'EM' story - of Brazil,Russia & Asian markets. I am now sticking my head out on Brazil and these are the reasons.
Economic Growth
Brazil’s $1.6 trillion GDP already ranks it as the ninth-largest economy in the world. And many believe its continued growth will lead it to surpass both Britain and France by 2012 to become the fifth-largest economy in the world!
Political Stability
Brazil’s President Lula was democratically elected, remains very popular and respects the term-limit restrictions. And while Brazilian corporate governance still lags that of the United States, significant strides have been made to attract and keep private investor capital.
Financial Strength
Brazil 'still' carries an investment grade credit rating and has roughly $240 billion in international reserves — made possible by its vast resources and new level of financial stability. On the financial front, it’s in fact stronger than many of its Latin American counterparts.
wtf, only few years back the IMF attached stringent conditions to the money it loaned to Brazil. Now, in a decisive about-face, the Brazilian government recently announced it will lend $10 billion to the IMF to help improve developing country access to capital!
Energy Independence(I think this is the killer ADVANTAGE)
Over 45% of Brazil’s energy comes from renewable sources — nearly ten times the average use of renewable energy among developed countries. And while it’s known for its abundant hydroelectric power (with more than 600 dams), bio-energy from ethanol has become the nation’s second largest energy source.
Plus, due to recent oil discoveries, Brazil is now believed to hold the world’s eighth largest conventional oil reserves!
In words of my marketing prof 'PLACE PLACE PLACE' - Location, Location, Location
Geographically speaking, Brazil is the fifth-largest country in the world — after Russia, Canada, China and the United States — with a total area of 3,286,488 square miles. But it’s not just the sheer amount of real estate it covers that’s important.
Brazil has 23% of the world’s arable land and at least 40% of it is unused. That’s more than all the farmland in the U.S. combined! And its abundant rainfall and tropical location allows for multiple planting seasons with high yields.
It’s also a leading producer of more than two dozen minerals — including diamonds and gold — as well as the world’s biggest exporter of beef, coffee, orange juice, sugar and chicken!
Population Growth and Urbanization
Brazil is the fifth most populated country in the world with 186 million inhabitants. And many of its residents are now migrating to central urban cities in search of employment, education and higher standards of living.
Meanwhile, higher incomes are fueling higher personal spending, leading to the emergence of a strong middle class. Consequently, demand for consumer goods, cars, and roads is skyrocketing add to this an extremely favourable demographic dividend.
A Well-Capitalized, Growing Banking System which if structured well has potential for triple digit growths.( is there something like double or triple underline , then do that to the point stated here)
Unlike banks in the United States, Brazilian banks are not weighed down by toxic assets, have no major mortgage lending problems and are well-capitalized at over 165% of the international banking standards.
And unlike the Unites States and other developed countries, Brazilians are under-banked and still under-utilize credit cards — pointing to enormous growth potential as Brazil’s middle class emerges into the 21st century.
So any one who wants to join me at copacabana for the New Year eve 2011?
V
This is known as a Fundmanagers "parody" having a brilliant Idea but no money to invest on, yours truly obviously is in this category now :( ! however I thought I must discuss this EM market story. Tom had raised a very valid 'Fixed income view' on Govie Bra'(Read Brazilian Government Bonds) in his post.To which I had commented on the 'EM' story - of Brazil,Russia & Asian markets. I am now sticking my head out on Brazil and these are the reasons.
Economic Growth
Brazil’s $1.6 trillion GDP already ranks it as the ninth-largest economy in the world. And many believe its continued growth will lead it to surpass both Britain and France by 2012 to become the fifth-largest economy in the world!
Political Stability
Brazil’s President Lula was democratically elected, remains very popular and respects the term-limit restrictions. And while Brazilian corporate governance still lags that of the United States, significant strides have been made to attract and keep private investor capital.
Financial Strength
Brazil 'still' carries an investment grade credit rating and has roughly $240 billion in international reserves — made possible by its vast resources and new level of financial stability. On the financial front, it’s in fact stronger than many of its Latin American counterparts.
wtf, only few years back the IMF attached stringent conditions to the money it loaned to Brazil. Now, in a decisive about-face, the Brazilian government recently announced it will lend $10 billion to the IMF to help improve developing country access to capital!
Energy Independence(I think this is the killer ADVANTAGE)
Over 45% of Brazil’s energy comes from renewable sources — nearly ten times the average use of renewable energy among developed countries. And while it’s known for its abundant hydroelectric power (with more than 600 dams), bio-energy from ethanol has become the nation’s second largest energy source.
Plus, due to recent oil discoveries, Brazil is now believed to hold the world’s eighth largest conventional oil reserves!
In words of my marketing prof 'PLACE PLACE PLACE' - Location, Location, Location
Geographically speaking, Brazil is the fifth-largest country in the world — after Russia, Canada, China and the United States — with a total area of 3,286,488 square miles. But it’s not just the sheer amount of real estate it covers that’s important.
Brazil has 23% of the world’s arable land and at least 40% of it is unused. That’s more than all the farmland in the U.S. combined! And its abundant rainfall and tropical location allows for multiple planting seasons with high yields.
It’s also a leading producer of more than two dozen minerals — including diamonds and gold — as well as the world’s biggest exporter of beef, coffee, orange juice, sugar and chicken!
Population Growth and Urbanization
Brazil is the fifth most populated country in the world with 186 million inhabitants. And many of its residents are now migrating to central urban cities in search of employment, education and higher standards of living.
Meanwhile, higher incomes are fueling higher personal spending, leading to the emergence of a strong middle class. Consequently, demand for consumer goods, cars, and roads is skyrocketing add to this an extremely favourable demographic dividend.
A Well-Capitalized, Growing Banking System which if structured well has potential for triple digit growths.( is there something like double or triple underline , then do that to the point stated here)
Unlike banks in the United States, Brazilian banks are not weighed down by toxic assets, have no major mortgage lending problems and are well-capitalized at over 165% of the international banking standards.
And unlike the Unites States and other developed countries, Brazilians are under-banked and still under-utilize credit cards — pointing to enormous growth potential as Brazil’s middle class emerges into the 21st century.
So any one who wants to join me at copacabana for the New Year eve 2011?
V
Monday, January 4, 2010
Bad Marketing
If marketing is the science of demand (this is what I took home from our MAMA class today), the home electronics industry has much to learn.
A few days ago I decided it was time to get rid of my 10y old 19 inch TV set and buy a nice new one. My dream TV set has a 37 inch flat screen, can be put onto the wall, comes with a built-in blue-ray player and has a tuner for HD television. For my wife it must be a white one.
Bad news. While it seems to be no problem for Apple to put DVD drives into their slick iMacs, integrating blue-ray players into their TVs seems impossible for Sony & Co. Am I the only consumer who dislikes cables and extra devices in his living room?
More bad news. Go to the websites of Sony, Panasonic, or Samsung. They will offer you help in choosing the right TV set. Samsung will ask whether you want to use it in the bathroom or in the bedroom. Panasonic will lengthily explain why Plasma screens are better than LCD ones and why LED ones are only pimped LCD ones. Sony asks if DLNA network technology is important for you.
Do I have to mention that you cannot select by color? Or even by the built-in tuners?
The good news is that you can look at the pictures and will eventually find out which ones are white. And here's my personal solution: Sony and Samsung don't make any 37 inch white TV sets (but they do offer 32 inch and 40 inch), Panasonic has one (with the evil LCD technology). No need to check any technical details, this must be the one.
I quickly ordered it at Amazon. Unfortunately it is out of stock...
(Tom)
Friday, January 1, 2010
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