Tuesday, November 30, 2010

Inclusive Growth – Role of Financial Sector

Below are some excerpts from a lecture at a University by Dr. K. C. Chakrabarty, Deputy Governor, Reserve Bank of India on Inclusive Growth – Role of Financial Sector
  • Here he talks about Inclusive Growth what it means ? why is it important ?. Inclusive growth means allowing people to contribute to and benefit from economic growth.
  • Off late it has caught policy makers attention because the benefits of economic growth happened in the past few years are not shared equally among people.
  • Growth is inclusive when it creates economic opportunities along with ensuring equal access to them.
  • The Indian economy, though achieved a high growth momentum during 2003-04 to 2007-08, could not bring down unemployment and poverty to tolerable levels.
  • Further, a vast majority of the population remained outside the ambit of basic health and education facilities during this high growth phase
  • Over 25% of Indians continue to live in abject poverty. As a result, Inclusive growth has become a national policy objective of the Union Government.
  • Govt has identified agriculture, infrastructure, health care and education as critical areas for achieving higher inclusive growth.
  • The policies aim at increasing the income and employment opportunities on the one hand and on the other; it tries to finance programmes which are capable of making the growth more inclusive.
Financial Inclusion--Financial inclusion is the process of ensuring access to appropriate financial products and services needed by vulnerable groups such as weaker sections and low income groups at an affordable cost in a fair and transparent manner by mainstream institutional players

Role of Financial Sector
  • Banks and other financial services players largely are expected to mitigate the supply side processes that prevent poor and disadvantaged social groups from gaining access to the financial system.
  • Access to financial products is constrained by several factors which include: lack of awareness about the financial products, unaffordable products, high transaction costs, and products which are not convenient, inflexible, not customized and of low quality
  • The empirical evidence shows that countries with large proportion of population excluded from the formal financial system also show higher poverty ratios and higher inequality.
  • However, we must bear in mind that apart from the supply side factors, demand side factors, such as lower income and /or asset holdings also have a significant bearing on inclusive growth.
  • The gigantic nature of the task, keeping in view the number of financially excluded people.
  • Lack of proper Business Models. Banks still perceive this as a burden and an imposition and not as a viable Business Model
  • The costs of administering low value transactions and of financial intermediation are perceived to be on the higher side.
  • Lack of cost effective scalable Delivery Models.
  • Banks must view Financial Inclusion as a huge business opportunity and perfect their Delivery Models. BC based delivery model has been made more flexible and inclusive
  • Involve all the stakeholders in the process. Governments, both Central and State, NGOs, technology vendors, Industry Associations, Insurance and Mutual Fund companies, society at large
Myths about Financial Inclusion
  • It is not their willingness but the lack of ability to deliver which is coming in the way
And he concludes that current policy objective of inclusive growth with stability is not possible without achieving universal Financial Inclusion.

Wednesday, November 17, 2010

Whats Ahead for Markets from Options Data

Concerns of Debt Crisis in Ireland along with expectations of a Rate hike in China in coming days(might be this week) prompted investors across the market to liquidate there positions and looking  for safer assets.

Irish banks have there own problem of debt caused by the housing bubble and similar is the case with portugal. Even EU and IMF are trying for bailout but markets are concerned that the problems might be spread to other peripharel countries.

Nifty Shed 132 points and settled at very crucial support point of 5980 . On the Equity Side we have
FII 16-Nov-2010 3157.02 3353.71 -196.69  
DII 16-Nov-2010 1542.54 1092.95 449.59
FII were Net Sellers and DII were Net Buyers.
On the other Side if we see the options Data where all the action happens moreover most of the action over there is done by FII's.
  • Nifty call options added 57.75 lakh shares in open interest whereas put options shed 4.00 lakh shares in open interest.

Options Data on 16-10-2010

There is lot CALL Writing happened at 6000 Levels with increase of  Open Interest of 27Lakhs meaning it will take RESISTANCE at these levels in coming days and also OI got increased for 6100 and 6200 means in coming days it will be tough to reach those positions.

In the PUT Side we have increase of OI at 5900 with Put Writing seen at 5900 and 5800 coupled with increase in OI expecting market not to go down and Taking a SUPPORT at these levels, though 6000 PUT writing happened many positions were closed as can be seen with decrease in OI of 8 Lakhs,similarly 6100 PUT and 6200 PUT had seen Decrease in OI .That means many PUT Writers closed there positions expecting that market might head south and there by limiting there loses.

Similarly we have seen Lot of CALL Writing at 6100,6200 meaning thatWriters are not expecting to go above in coming days...

Looks like it might Trade in 5900+ to 6100 in coming days

On making good decisions..Norway Bank

Norway Central Bank Deputy Governor Jan F. Qvigstad gives a superb speech on the "On making good decisions". The speech revolves around how central banks make decisions and what makes a decision good or bad .
It cover the following areas:
  • Independence provides a sound framework for interest rate decision
Most countries have now delegated the task of ensuring price stability to the central bank. The government has set an inflation target for monetary policy and delegated the operational conduct of monetary policy to Central Bank
The Norwegian economist Finn Kydland received the Nobel Prize for economics in 2004 for having shown that on the whole, monetary policy decisions are better if policymakers delegate interest rate setting to an independent central bank under a clear mandate
  • We make decisions under uncertainty
Independence alone does not guarantee good decisions. Even if an independent central bank is better positioned to avoid having short-term expediency and changing preferences dictate interest rate policy, its decisions must be made under considerable uncertainty.
“Uncertainty is not just an important feature of the monetary policy landscape; it is the defining characteristic of that landscape”....Alan Greenspan
  • Groups often make better decisions than individuals
Contestants on the television game show Who Wants to Be a Millionaire? have various so-called “lifelines”, including telephoning a smart friend or asking the studio audience for help. It has transpired that the studio audience is the contestants’ absolute best bet. The majority of the studio audience votes for the correct answer nine out of ten times, beating out smart friends, who provide the correct answer only 65 per cent of the time
  • But groups are no guarantee for good decisions
The deliberative process does not necessarily lead to a better decision. When the group members share the same world view and thinking, groupthink can lead the members astray. There is typically little dissent in discussions where participants think alike. The group can therefore be convinced that their common standpoint must be right.
  • How do we arrive at a decision?
There two approaches: premise-based or conclusion-based. The two approaches may have different outcomes. Many will favour the premise-based approach because it gives weight to the underlying basis for the decisions we make.
  • Was the decision good?
The objective of monetary policy is a natural place to begin our assessment. Have we or have we not achieved price stability? Even if we make our best efforts, there is no guarantee that we will succeed in reaching this objective. The key policy rate is not the only factor affecting the economy and that can disturb the outcome.

Telecom Scam---Part1

Though am not interested in reading political news (waste of time) this particular telecom scam made to look a bit into Google and find what happened and happening with scam. It’s high time to look into evidence of Telecom Scam which is rocking the parliament for couple of days.

Here is article by Canary Trap time line of events:

August 28, 2007: In 2001, there were only 4 million cell phone subscribers; whereas by 2007-2008, the number of cell phone subscribers was around 350 million. Thus by fixing license fees at 2001 prices, the Telecom Ministry enabled companies that were allotted licenses to command huge premia.

CompanyLicense PaidSold to
Swan153745 % sold to Etisalat for 4200 cr
Unitech166160 % sold to Telenor
Tata--26 % sold to Docomo

Based on the aforesaid sale of shares by Unitech and Swan, the market value of these 9 new 2G licenses amount to a total of Rs 70,022.42 crores, for which these 9 companies/conglomerates had paid DoT a total of Rs 10,772.68 crores.

October 21, 2009: The CBI registered an FIR in the scam.

April 28, 2010:Details of tapes establishing Raja’s dubious role in the scam surfaces in the media. Opposition parties demanded that the PM sack Raja.

A little bit of digging the information led me to this page where the reporter of magazine gave confidential information which main stream media never talked.

Some excerpts from it:
Radia close associate of Raja has been key in getting license and spectrum to the following telecom companies 1) swan2) aircel3) Unitech wireless4) Datacom

  • Datacom was setup by HFCL group along with Mr.Dhoot of Videocon is alleged to be having funding through Mukesh Ambani group through a employee Manoj Modi
  •  Swan on paper is backed by Mumbai based real estate Company Dynamix Balwas group of companies and it was moved up the priority list of spectrum allocation by DOT
  •  UAE telecom giant Ehtisalat controls about 45% of swan telecom and for this they paid $900million.
  •  This deal make Swan at $2 Billion and at present Mumbai based Delphi investments holds 9.9% stake in Swan.90.1 stake in Swan Telecom is owned by Tiger Trustees which in turn is 99.8% owned by Dynamix Balwas Ltd.
  •  Seems that Raja and Radia have interests in Swan and there associates are on board of Swan
CBI registered a case against conspiracy between few public officers and private persons in grant of telecom license in 2007-08.It is learnt that certain individuals like Ms Radia of Noesis consultancy were involved in the above mentioned criminal case and DGI and Income Tax authorities tapped the wires of Radia to get some information.

The companies which she and co consult are not only for telecom, aerospace, power and infrastructure but also influence and change policies of government to suit commercial requirements of various clients.
From the conversations it appears that she had role in telecom license and guides a newly formed telecom company to delay the stake sale and not to look at it as a windfall gain. There are some direct conversations of her and telecom minister. In some other conversations she boasts of herself for obtaining telecom license for few companies.
June internal evaluation report from DGI
Totally 9 lines were kept under surveillance during the month of June 2009 belong to two separate groups. First group relates to a PR agency.

  • The conversations indicate money laundering and structured payoffs transactions and liaison for projects of telecom and power.
  •  Also indicate cross borer transactions related to telecom, petroleum and media.
Second group comprises of 3 members
  •  And calls to this group appear relate to financial transactions ranging in crores including foreign bank accounts
  • Unauthorized international derivative transactions
  • In fact there appears some calls related to cricket betting and some other sports (ohhh I was under impression that betting happens only in cricket, seems now cricket has a rival)
July internal evaluation report from DGI
First group: As per conversations

  • The associates have apparently fronted for someone (Mukesh Ambani) to acquire a news channel (9X) in India and there appears some cross border transactions.
  •  Conversations of target (Radia) with a businessman (Tarun Das FICCI Chair and Government Nominee…Mukesh Ambani) who is also a government nominee on a State PSU (haldia Petro) appears to suggest that a target along with business man is trying to facilitate a take over of this PSU by a large client (RIL) of target.
  •  The Target as per telephone conversations facilitated for a few filing PILs by NGO to hurt the business interests if the rival clients (Anil Ambani ADAG)
Reports on news in whispers in Corridor:
  •  Reports that Sunil Mittal is also banking on with Radia to make peace with Raja on foreign take over and his interests in spectrum
  •  Neera Radia is chief of Vaishnav Corporate Consultants Pvt Ltd, Noesis Consulting Vitocom and Neucom Consulting. Vitocom has been handling the business of NDTV Imagine.
  • Neucom was set up to handle affairs of Mukesh Ambani Group.
  • Vaishnav handles the affairs of Tata, Unitech, and Star TV along with other clients.
  • Noesis officially comprises of retired senior bureaucrats and controlled by Radia.
  • There is long conversation between Ratan Tata and Radia which establishes that Tata does not want Maran to be Telecom Minister at any cost.Tata felt the need to exit telecom if Maran becomes Minister.
  •  Looks like Radia is also in touch with Neera and Ratnam CA of Karunandhi wife (wovvvv…first time I heard of this…).
  •  Radia and Kanimozhi behalf of Burhka Dutt(NDTV fame..I guess now she is in CNN IBN) and Vir Sanghvi (Not Sure of this Person) were negotiating minister berths for DMK members.
  •  Sunil Mittal lobbied to prevent Raja to become telecom minister and Tata Lobbied to prevent Maran from becoming Telecom Minister. (Another wovvv)
  •  In Jharkhand Tata’s need lease of to extend for which the great madhu koda (1000 crore scam) asked for 180 crores. Radia got the lease extension from governor for which ratan Tata sanctioned 1 crores as reward for the team
  • FICCI chief Tarun Das is chairman of haldia petro corp. and Mukesh wants to take over it. With help of Radia they are handling the matter
  •  As per conversations there appears RIL purchasing a house for VK Duggal, Director General of Hydrocarbons News
  •   9X was controlled by Mukesh Ambani
If this is real then all credibility gained by Mr Clean MM Singh are thrown into dustbin.
Moreover none of the news papers are willing to post the news related to it. Seems government is denying that it never allowed wire tapings.

An Open Letter to Ben Bernanke

This is Open Letter to Chairman Ben Bernanke

Dear Mr. Chairman:
We believe the Federal Reserve's large-scale asset purchase plan (so-called "quantitative easing") should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed's objective of promoting employment.
We subscribe to your statement in The Washington Post on November 4 that "the Federal Reserve cannot solve all the economy's problems on its own." In this case, we think improvements in tax, spending and regulatory policies must take precedence in a national growth program, not further monetary stimulus.
We disagree with the view that inflation needs to be pushed higher, and worry that another round of asset purchases, with interest rates still near zero over a year into the recovery, will distort financial markets and greatly complicate future Fed efforts to normalize monetary policy.
The Fed's purchase program has also met broad opposition from other central banks and we share their concerns that quantitative easing by the Fed is neither warranted nor helpful in addressing either U.S. or global economic problems.
Cliff Asness

Michael J. Boskin

Richard X. Bove

Charles W. Calomiris

Jim Chanos

John F. Cogan

Niall Ferguson

Nicole Gelinas

James Grant(yes u saw it right he is from Grants interest rate observer)
Kevin A. Hassett

Roger Hertog

Gregory Hess

Douglas Holtz-Eakin
Former Director, Congressional Budget Office
Seth Klarman

William Kristol

David Malpass

Ronald I. McKinnon

Joshua Rosner
Dan Senor

Amity Shlaes

Paul E. Singer

John B. Taylor yes you saw it right he is the one who  proposed the Taylor rule, which provides a guide to central banks on how to determine interest rates.

Peter J. Wallison

Geoffrey Wood

Ireland debt crisis

After some months calmness in markets a storm is starting to intensify. Few of the factors leading causing turmoil in markets are Ireland banking problems..unlike Greece debt problems but eventually will come there in some time in 2011. Korea increased interest rate to tame inflation and markets expect china may fallow the suit. and last but not least QE2 and its effects on currency war

Below are some links related to Ireland Crisis
Ireland's minister for European affairs, Dick Roche, hit the radio waves this morning, telling the Today programme that the situation is under control, and there's no need to panic:

"There is a problem with liquidity in banks, there is no doubt about that, but I don't think that the appropriate response to that would be for European finance ministers to panic.
"Ireland doesn't need to trigger any mechanisms because of sovereign debt and the problems in banks are being dealt with."
European Central Bank vice president Vitor Constancio has also been talking this morning, just before he headed off to Brussels. Constancio argued that Spain and Portugal might still be secure, even if Ireland does buckle. Quotes via Reuters:

Euro zone ministers meet to discuss Ireland's debt crisis

There is no necessary link in this respect. All situations are different from each other...it depends of course on market developments, which cannot be predicted," he said.
"Several countries have been under some pressure from the markets, that is well known. But as you have seen, there are differences. The market really discriminates (between) the different situations that exist."

In the bond markets, the yield (or interest rate) on Irish government debt has leapt again to 8.542%, up from 8.17% overnight. That's a clear sign that the markets are more concerned about the possibility that Ireland will restructure its debt, or even default.

With Ireland's economic crisis centre stage, look at the characters involved in bringing Irish banking to its knees

This is a very interesting editorial in the FT, which says that the root of the problem in Ireland is the government’s total commitment to bank bondholders, which translates into a total risk for the taxpayer. Unless the Irish government changes that, its sovereign bonds will be under pressure.  

Monday, November 15, 2010

4 Types Of Indicators FX Traders Must Know

Here is article from investopedia which talks about important technical indicators one must follow while trading, though it talks about forex i feel same set of indicators and analysis can be followed for Equities also.

4 Types Of Indicators FX Traders Must Know

Of which i personally like :
A Trend-Confirmation Tool:MACD,
An Overbought/Oversold Tool:RSI,
A Profit-Taking Tool:Bollinger,
Non correlated Overbought/Oversold Tools can be used in comparision with RSI:Stocastics,Williams-R

Thursday, November 11, 2010

Ayn Rand on money

From ATLAS SHRUGGED, by Ayn Rand, page 387: 

Rearden heard Bertram Scudder, outside the group, say to a girl who made some sound of indignation, "Don't let him disturb you. You know, money is the root of all evil—and he's the typical product of money." 

Rearden did not think that Francisco could have heard it, but he saw Francisco turning to them with a gravely courteous smile. 

"So you think that money is the root of all evil?" said Francisco d'Aconia. "Have you ever asked what is the root of money? Money is a tool of exchange, which can't exist unless there are goods produced and men able to produce them. Money is the material shape of the principle that men who wish to deal with one another must deal by trade and give value for value. Money is not the tool of the moochers, who claim your product by tears, or of the looters, who take it from you by force. Money is made possible only by the men who produce. Is this what you consider evil? 

"When you accept money in payment for your effort, you do so only on the conviction that you will exchange it for the product of the effort of others. It is not the moochers or the looters who give value to money. Not an ocean of tears nor all the guns in the world can transform those pieces of paper in your wallet into the bread you will need to survive tomorrow. Those pieces of paper, which should have been gold, are a token of honor— your claim upon the energy of the men who produce. Your wallet is your statement of hope that somewhere in the world around you there are men who will not default on that moral principle which is the root of money. Is this what you consider evil? 

"Have you ever looked for the root of production? Take a look at an electric generator and dare tell yourself that it was created by the muscular effort of unthinking brutes. Try to grow a seed of wheat without the knowledge left to you by men who had to discover it for the first time. Try to obtain your food by means of nothing but physical motions—and you'll learn that man's mind is the root of all the goods produced and of all the wealth that has ever existed on earth. 

"But you say that money is made by the strong at the expense of the weak? What strength do you mean? It is not the strength of guns or muscles. Wealth is the product of man's capacity to think. Then is money made by the man who invents a motor at the expense of those who did not invent it? Is money made by the intelligent at the expense of the fools? By the able at the expense of the incompetent? By the ambitious at the expense of the lazy? Money is MADE—before it can be looted or mooched—made by the effort of every honest man, each to the extent of his ability. An honest man is one who knows that he can't consume more than he has produced. 

"To trade by means of money is the code of the men of good will. Money rests on the axiom that every man is the owner of his mind and his effort. Money allows no power to prescribe the value of your effort except by the voluntary choice of the man who is willing to trade you his effort in return. Money permits you to obtain for your goods and your labor that which they are worth to the men who buy them, but no more. Money permits no deals except those to mutual benefit by the unforced judgment of the traders. Money demands of you the recognition that men must work for their own benefit, not for their own injury, for their gain, not their loss—the recognition that they are not beasts of burden, born to carry the weight of your misery—that you must offer them values, not wounds—that the common bond among men is not the exchange of suffering, but the exchange of GOODS. Money demands that you sell, not your weakness to men's stupidity, but your talent to their reason; it demands that you buy, not the shoddiest they offer, but the best your money can find. And when men live by trade—with reason, not force, as their final arbiter—it is the best product that wins, the best performance, then man of best judgment and highest ability—and the degree of a man's productiveness is the degree of his reward. This is the code of existence whose tool and symbol is money. Is this what you consider evil? 

"But money is only a tool. It will take you wherever you wish, but it will not replace you as the driver. It will give you the means for the satisfaction of your desires, but it will not provide you with desires. Money is the scourge of the men who attempt to reverse the law of causality—the men who seek to replace the mind by seizing the products of the mind. 

"Money will not purchase happiness for the man who has no concept of what he wants; money will not give him a code of values, if he's evaded the knowledge of what to value, and it will not provide him with a purpose, if he's evaded the choice of what to seek. Money will not buy intelligence for the fool, or admiration for the coward, or respect for the incompetent. The man who attempts to purchase the brains of his superiors to serve him, with his money replacing his judgment, ends up by becoming the victim of his inferiors. The men of intelligence desert him, but the cheats and the frauds come flocking to him, drawn by a law which he has not discovered: that no man may be smaller than his money. Is this the reason why you call it evil? 

"Only the man who does not need it, is fit to inherit wealth—the man who would make his own fortune no matter where he started. If an heir is equal to his money, it serves him; if not, it destroys him. But you look on and you cry that money corrupted him. Did it? Or did he corrupt his money? Do not envy a worthless heir; his wealth is not yours and you would have done no better with it. Do not think that it should have been distributed among you; loading the world with fifty parasites instead of one, would not bring back the dead virtue which was the fortune. Money is a living power that dies without its root. Money will not serve that mind that cannot match it. Is this the reason why you call it evil? 

"Money is your means of survival. The verdict which you pronounce upon the source of your livelihood is the verdict you pronounce upon your life. If the source is corrupt, you have damned your own existence. Did you get your money by fraud? By pandering to men's vices or men's stupidity? By catering to fools, in the hope of getting more than your ability deserves? By lowering your standards? By doing work you despise for purchasers you scorn? If so, then your money will not give you a moment's or a penny's worth of joy. Then all the things you buy will become, not a tribute to you, but a reproach; not an achievement, but a reminder of shame. Then you'll scream that money is evil. Evil, because it would not pinch-hit for your self-respect? Evil, because it would not let you enjoy your depravity? Is this the root of your hatred of money? 

"Money will always remain an effect and refuse to replace you as the cause. Money is the product of virtue, but it will not give you virtue and it will not redeem your vices. Money will not give you the unearned, neither in matter nor in spirit. Is this the root of your hatred of money? 

"Or did you say it's the LOVE of money that's the root of all evil? To love a thing is to know and love its nature. To love money is to know and love the fact that money is the creation of the best power within you, and your passkey to trade your effort for the effort of the best among men. It's the person who would sell his soul for a nickel, who is the loudest in proclaiming his hatred of money—and he has good reason to hate it. The lovers of money are willing to work for it. They know they are able to deserve it." 

"Let me give you a tip on a clue to men's characters: the man who damns money has obtained it dishonorably; the man who respects it has earned it. 

"Run for your life from any man who tells you that money is evil. That sentence is the leper's bell of an approaching looter. So long as men live together on earth and need means to deal with one another—their only substitute, if they abandon money, is the muzzle of a gun. 

"But money demands of you the highest virtues, if you wish to make it or to keep it. Men who have no courage, pride, or self-esteem, men who have no moral sense of their right to their money and are not willing to defend it as they defend their life, men who apologize for being rich—will not remain rich for long. They are the natural bait for the swarms of looters that stay under rocks for centuries, but come crawling out at the first smell of a man who begs to be forgiven for the guilt of owning wealth. They will hasten to relieve him of the guilt—and of his life, as he deserves. 

"Then you will see the rise of the double standard—the men who live by force, yet count on those who live by trade to create the value of their looted money—the men who are the hitchhikers of virtue. In a moral society, these are the criminals, and the statutes are written to protect you against them. But when a society establishes criminals-by-right and looters-by-law—men who use force to seize the wealth of DISARMED victims—then money becomes its creators' avenger. Such looters believe it safe to rob defenseless men, once they've passed a law to disarm them. But their loot becomes the magnet for other looters, who get it from them as they got it. Then the race goes, not to the ablest at production, but to those most ruthless at brutality. When force is the standard, the murderer wins over the pickpocket. And then that society vanishes, in a spread of ruins and slaughter. 

"Do you wish to know whether that day is coming? Watch money. Money is the barometer of a society's virtue. When you see that trading is done, not by consent, but by compulsion—when you see that in order to produce, you need to obtain permission from men who produce nothing—when you see that money is flowing to those who deal, not in goods, but in favors—when you see that men get richer by graft and by pull than by work, and your laws don't protect you against them, but protect them against you—when you see corruption being rewarded and honesty becoming a self-sacrifice—you may know that your society is doomed. Money is so noble a medium that it does not compete with guns and it does not make terms with brutality. It will not permit a country to survive as half-property, half-loot. 

"Whenever destroyers appear among men, they start by destroying money, for money is men's protection and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Gold was an objective value, an equivalent of wealth produced. Paper is a mortgage on wealth that does not exist, backed by a gun aimed at those who are expected to produce it. Paper is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it becomes, marked: 'Account overdrawn.' 

"When you have made evil the means of survival, do not expect men to remain good. Do not expect them to stay moral and lose their lives for the purpose of becoming the fodder of the immoral. Do not expect them to produce, when production is punished and looting rewarded. Do not ask, 'Who is destroying the world?' You are. 

"You stand in the midst of the greatest achievements of the greatest productive civilization and you wonder why it's crumbling around you, while your damning its life-blood—money. You look upon money as the savages did before you, and you wonder why the jungle is creeping back to the edge of your cities. Throughout men's history, money was always seized by looters of one brand or another, but whose method remained the same: to seize wealth by force and to keep the producers bound, demeaned, defamed, deprived of honor. That phrase about the evil of money, which you mouth with such righteous recklessness, comes from a time when wealth was produced by the labor of slaves—slaves who repeated the motions once discovered by somebody's mind and left unimproved for centuries. So long as production was ruled by force, and wealth was obtained by conquest, there was little to conquer. Yet through all the centuries of stagnation and starvation, men exalted the looters, as aristocrats of the sword, as aristocrats of birth, as aristocrats of the bureau, and despised the producers, as slaves, as traders, as shopkeepers—as industrialists. 

"To the glory of mankind, there was, for the first and only time in history, a COUNTRY OF MONEY—and I have no higher, more reverent tribute to pay to America, for this means: a country of reason, justice, freedom, production, achievement. For the first time, man's mind and money were set free, and there were no fortunes-by-conquest, but only fortunes-by-work, and instead of swordsmen and slaves, there appeared the real maker of wealth, the greatest worker, the highest type of human being—the self-made man—the American industrialist. 

"If you ask me to name the proudest distinction of Americans, I would choose—because it contains all the others—the fact that they were the people who created the phrase 'to MAKE money.' No other language or nation had ever used these words before; men had always thought of wealth as a static quantity—to be seized, begged, inherited, shared, looted, or obtained as a favor. Americans were the first to understand that wealth has to be created. The words 'to make money' hold the essence of human morality. 

"Yet these were the words for which Americans were denounced by the rotted cultures of the looters' continents. Now the looters' credo has brought you to regard your proudest achievements as a hallmark of shame, your prosperity as guilt, your greatest men, the industrialists, as blackguards, and your magnificent factories as the product and property of muscular labor, the labor of whip-driven slaves, like the pyramids of Egypt. The rotter who simpers that he sees no difference between the power of the dollar and the power of the whip, ought to learn the difference on his own hide-as, I think, he will. 

"Until and unless you discover that money is the root of all good, you ask for your own destruction. When money ceases to be the tool by which men deal with one another, then men become the tools of men. Blood, whips and guns—or dollars. Take your choice—there is no other—and your time is running out."

Wednesday, November 10, 2010

Pulse of Commerce Index

Here is another Leading Indicator in which tracks US Economy.
 The Ceridian-UCLA Pulse of Commerce Index™ is based on real-time diesel fuel consumption data for over the road trucking and serves as an indicator of the state and possible future direction of the U.S. economy. By tracking the volume and location of fuel being purchased, the index closely monitors the over the road movement of raw materials, goods-in-process and finished goods to U.S. factories, retailers and consumers.
October Month report signals economy is not going in right direction for now.
 Here is the October Report.

The Ceridian-UCLA Pulse of Commerce Index™ (PCI) by the UCLA Anderson School of Management, adjusted for season and for monthly workdays, fell 0.6% in October following a decline of 0.5% in September and a decline of 1.0% in August, which was the first three consecutive months of decline since January 2009, when we were still deep in recession

October is especially important because it is the peak month for holiday shipping, with a seasonal factor of 1.029 compared with 0.978 in November and 0.941 for December. The October decline in the PCI can be summarized in a single word: worry. Worry about the strength of sales in the holiday period has apparently caused a slowdown in trucking in October which might be only a postponement to November if consumers show a little more exuberance.

The PCI this month is disappointing because the growth in the economy in the first three quarters of this year if sustained would have made the holiday even better.The declines in the PCI in the last three months suggest further slowing of growth of industrial production.

There is a one to one relationship of GDP and IIP with PCI and also  PCI report comes before IIP and GDP report . Looks PCI is a Good indicator to keep Track in future

Friday, November 5, 2010

HSBC October Purchasing Managers Index

The latest PMI data pointed to a marked expansion of Indian private sector output. Activity in both the manufacturing and service sectors grew at faster rates in October, with the headline HSBC India Composite PMI posting 58.4, from 56.5 in September

Commenting on the India Services PMI survey, Frederic Neumann, Co-Head of Asian Economics Research at HSBC said:
“India's service sector picked up steam in October, with firms continuing to add jobs. The details, however, suggest that services might cool in the coming months, with new business growth decelerating slightly and backlogs contracting. The RBI may take comfort in the fact that both output and input price pressures are easing, although this is not sufficient to raise a definitive green flag on inflation.”

Key points
• Expansion of new business in the service sector continued to slow.
Contribution of Service Sector to GDP is huge and it might act as drag on 8% growth rate
• Overall employment rose, after remaining unchanged in September.
• Falling charges in services offset an increase in manufacturers’ output prices.
Increase in manufactured product prices will add the already high inflation

 Previous Posts:

Monday, November 1, 2010

Macroeconomic and Monetary Developments --RBI Second Quarter Review

RBI in its 2nd quarter review is more concerned about the inflation  and the capital inflows coming into EME which might lead to currency appreciation and asset price bubbles. Also talks about Current account deficit and Capital Account surplus and going forward how its going to be. One can get a Good understanding of Economics by reading this Report
The output growth of the Indian economy has started to consolidate around the trend
after a sharp recovery and the headline inflation also shows signs of peaking off. Going
forward, various forward looking surveys conducted in the recent period suggest strong
y-o-y growth. The Industrial Outlook Survey of the Reserve Bank also points to
continuation of the growth momentum. The professional forecasters’ survey of the Reserve
Bank registered a marginal upward revision in the GDP growth rate for 2010-11, on the
back of higher growth forecasts for agriculture and services sector. The overall outlook
suggests that notwithstanding some recent moderation in headline inflation, the level of
inflation remains above the comfort level. The Reserve Bank’s policy stance is likely to
be shaped by dual goals of maintaining the growth momentum in an atmosphere of
global uncertainty, while striving to moderate inflation further
Will the Reserve Bank of India (RBI) raise policy rates for the sixth consecutive time this year to tame inflation? Wait for Tomorrow...looks like they are bit uncomfortable in controlling inflation