Saturday, May 30, 2009

Family first (My family and other legislators)

Finally, Karunanidhi dots the 'i'. One son given cabinet, one the state, grand nephew taken care of. Daughter not yet taken care of, so lets watch for this.
Family rule at Centre, J&K, Tamil Nadu, Bihar, Haryana, Punjab, Delhi.....
We are surely a big happy family.
So, as party members realise that they cannot climb up the family tree, they will have to be content with the cash and other monetary benefits thrown to them by the ruling families.
Ergo, corruption has to go still higher. Already at its highest since independence. Not that this bothers the industry or anyone. Industry happy that at a price 'impossible is nothing'. Politicos happy that the money tree is growing. People have iron in the soul. Good story for page 3 media to air, gives them TRP's.
The joys of the family spread happiness. Rejoice.

Belief Rally in the Indian Stock markets

Strong cash in to the market, expectations that the new government (new??) will execute the wish list of all the capitalists and the 'fear' infused in to the short sellers have all pooled in to take the stock markets to a new range. Hopefully, the market may not crack 12k on the downside, but looks like touching 16K soon.
This rally is thus, based on BELIEF and hope rather than on any fundamentals. Of course, markets do not respect fundamentals at any given point of time. Hope the mid cap rally continues, so that we can sell of junk which we 'forgot' to sell in the last rally.
The economic growth numbers across the world seem to indicate that 2009 end will see a revival. India continues its growth on the back of government spending. Fiscal deficit is not a worry for any one as demand compression is keeping prices low. This is the only wedge of worry.
Apart from that, our GDP should clock 5% next year also, I think.

Tuesday, May 26, 2009

Family affairs- Making of a cabinet

The Wimp and the Iron Maiden are stuck, almost ten days after the so called 'clear' mandate from the voters. With the second and third (de) generation of veteran politicians getting elected (no surprise since these off springs are born in to so much wealth that they have to get back in to the gutter to multiply this wealth) there is a problem of seat and ministry allocation. With some of the families having both generations elected, it is indeed a dillema for any irrational root of a rational number.
Of course, loyalty to the ruling family has its rewards, with plum ministries.
Dekh tamasha, dekh.
Whilst every good human being is happy that Arjun Singh is no longer screwing up the education system, the equally big fear is of someone else wanting to play the 'secular' Congress card by promoting even more reservations. Maybe the new person will also have a fiat for quotas in private sector jobs also. Will be one more brownie point for the next election for the Congress!!
God save the citizens of the world's largest family ruled nation.

Tuesday, May 19, 2009

circuit breakers - artificial interference

Mr Ajay Shah has argued against circuit breakers.
I support this. Why should the regulators interfere? Do we have to wet nurse everyone? Any one who plays the stock market, is a gambler and should be at the mercy of market forces. The job of the regulator is to catch wrong doers and manipulators. If they do that well, they serve their purpose. Instead of abetting manipulation (I think circuit breakers permit manipulation). A compromise could be to see if the markets trade at or near the articifical barrier of 10 or 15 or 25 percent for a minimum period of time, say one hour. By shutting down the market, investors lose an exit opportunity. And to my mind, exit is more important than entry. Every small investor wants to buy and when he loses because he foolishly entered, he cries wolf.

Monday, May 18, 2009

The unbearable burden on Congress

Today was a quicky at the stock markets. Surprised by the ease with which the Congress is forming a government, throwing aside the left, the lalus and the amar singhs, the market is going to be on a tear for some time. The fun will be if the FII buy orders that are not executed today, get called off tomorrow. Reasonable to expect that, given that stocks are 20% higher!!
Fundamentals are not to be dicussed. Enjoy the ride, sell if you had forgotten to in the last rally. Economy will take a year plus to recover. Stocks will become cheaper again. The Congress now has the unbearable burden of expectations. From here, one can only expect disappointments, given that the market wants divestment, FDI without ceiling etc.,
Interesting is the SEBI chief's remark " we are closely watching the market". Are they not supposed to in any case?
The gossip is that Ketan is short, Anil is long and someone big is short.

MIOT hospital at Chennai

Chennai, the home of medical tourism for the firangs. Heard of some bad experiences, which ought to serve as an eye-opener. This link is about someone's experience of MIOT hospitals, a high profile hospital, which advertises in a big way.
I know of another family who had a terrible experience out here.

Saturday, May 16, 2009

What a verdict

Whilst personally disappointing, the election results appear to be a good thing. Hopefully the UPA can keep back the begging bowl for a rainy day. Hope they now have the balls to implement a national agenda, free of the Left and the ilks of DMK , Samajwadi etc.,
At the point of writing, PC has lost (so much for his arrogance) thanks to the Tamil film industry campaign. (Unfortunately, he has won in a recount, so we will have to suffer his arrogance for another term) . It would be better if Manmohan Singh is the Finance Minister. He can hold two portfolios, since in any case the PM one is just a rubber stamp as "authorised' signatory. Naturally, Karunanidhi wants cabinet berths for his several family members. One no daughter, one no son (one no son for the state) and one no nephew. So the moolah can keep pouring in to the family coffers.
The BJP has to do some serious re-think. They now have four years to decide whether they want to be a national party or not. They have to dump LK Advani and promote the younger guns, drop Ayodhya etc and focus on Bijli, Sadak and Paani.
The Congress should thank the NREG programme. A few villages I visited have been totally swept by this programme, even if they do not see the full money. Even a daily dole of 30 bucks for each family member is working wonders. Forget what it does to the fiscal deficit.
Now the Congress will have the unpleasant task of shit cleaning the mess it thought that someone else would inherit. Let us hope that the global economic recovery is rapid enough to hid this and we emerge smiling.
One thought. On Monday morning, we may have a great opportunity to sell stocks.

Wednesday, May 13, 2009

The ballot box- What does it hold?

At last. Votes have been cast. In two days, the count will start. Till then, the TV channels will go crazy with exit polls, likely permutations and combinations and such other serious intellectual masturbation. The anchors know it all. They cut off the speakers in the middle, dis engage when the topic gets too hot and when the agenda gets out of the comfort zone. Of course, the talking heads from different parties also like to ensure that the other person does not get to talk.
I managed to cast my vote, with great difficulty. Not finding my name in the list, no election official willing to help out and finally brute force of seeing the list personally helped. The election officials all seemed to be in the employ of the ruling party. A call for complaint to the 'election' observer (who I am told is generally an IAS rank) was shocking. When I told the person about my name not being on the list, inspite of being on the list with several party desks outside the election office, the observer said. "too bad". I got pissed off and asked the person whether that was their attitude to everything. In response I was told to lodge a formal complaint. Surprise!! The complaint was to be addressed to the observer. The election commission is just a charade and is clearly a tool in use by the ruling party. That is the impression I walked away with. At the polling centers, the presiding officers made no move to help and were eager to shove me out.

Coming to the results, it will be interesting to see the outcome. Will not be surprised if a cobbled up Nth front is given 'support' by Congress, if the exit polls are anything to go by!! So, we can look forward to another fresh era of heightened corruption as the new netas try to milk their kursi's in the shortest time possible, due to fear of the government not lasting the full term.
And with netas joining the band wagon to form the government likely to make heavy demands, we are in for surprising cabinet.
Most likely, we are headed to a big khichdi, with the rice missing.
Long live democracy.

Monday, May 4, 2009

Election outcomes and impact on India

1. Who comes to power is immaterial.
2. Reforms ceased in 2004.
3. Industry is immune to politics
4. Politicians have become practical and corruption is here to stay In fact, I think corruption is highest since independence and will get worse.
5. Any party in power will inherit a pigsty of an economy, with 15% combined fisc deficit and falling revenues.
6. If there is global recovery India will also recover, but the problem we will face is inflation of unprecedented magnitude. This is because of rampant M3 growth and supply bottlenecks.etc
7. Even if Mayawati or Jayalalitha come to power, things cannot get too bad
8. Whilst BJP looks like a good bet, we must remember that this time around, there is no Vajpayee. LK Advani is rabid and is 'economically' challenged and a megalomaniac to boot. He will probably be a poor choice.
9. Whoever comes in to power, will have around 20 odd partners to please. Means higher corruption, more freebies and gradual erosion which will ultimately lead to civil unrest and further fragmentation.
10. RBI will panic ( as my good friend Anupam Gupta points out) and raise rates too fast, but as usual, they will be under the grand delusion that monetary policy holds the key to economic growth.

New Pension Scheme- Teething pains, but good one

There is a great opportunity to improve long term government finances by making it mandatory for all government employees to move out of the present pension system, which amounts to pick-pocketing by government employees from tax payers.

The New Pension Scheme is interesting. Some quick takes:

Contributions to the NPS from salary should become tax deductible;
The way it is structured, maturity benefits attract taxation; this will surely change to make it tax free;
The Pension Fund Managers are no great investment managers, with the usual suspects from the banking and finance industry;
Investment is only in debt and in the stock ‘indexes’. Why should this attract high fees?
Record keeping fees is ridiculous. In a mutual fund, the R&T fees come out of the permitted cap of charges that can be charged to the investor;
The government should also offer a ‘fixed return’ option like the PPF for risk averse investors. Let it be fixed at around 8 or 9 percent per annum for small investors, say for annual contributions up to a lakh of rupees. Even if the government has to subsidise part of it, it should not matter. This burden will be far less than what it gives to the farmers or sugar cane growers.

Net net, I think that it is a good thing. Over time, competition will bring down the costs.

The government should also ensure that each and every government employee (whether state or central or PSU or from the RBI or SBI or any other government employer) shifts to this NPS compulsorily. This is the only way that the future generations will be saved from the burden of mounting pension bills. Today, in a few state governments, the pension bill actually exceeds the current wage bill!! And this burden is borne by honest taxpayers like me.

Mumbai ducks the voting

The media has made a big thing about the poor voter turnout in Mumbai. The valor, compassion and other fantastic attributes given to the ‘Mumbaikar’ are a creation of the media and the page three intelligentsia. The real Mumbaikar is of several shades:

i) the businessman trader community who worship Goddess Lakshmi. They have no loyalties or affiliation and love any politician who helps them to make money, evading taxes in the bargain. They can afford all the worldly comforts, lack for nothing and do not care who is in power. They believe that everyone can be bought at a price. They talk in ‘petis’, ‘khokas’, etc ,;
ii) The middle class NDTV / Timesnow /CNN watcher. Typically working in offices, having comfortable lifestyles, with houses bought on housing loans. This Mumbaikar is one who likes to talk a lot, but will not go out on a limb to help anyone. His problems are focused on the EMI, school admission, and higher education for children etc., No time for politics and at heart, really does not care who comes to power.
iii) Same as above, but a government employee. Works for some form of government or a government company. Low working hours, some side money, pension, etc. Highest level of job security. Not concerned with who is in power. Limited ambitions, uses public transport and is more worried about train crowds rather than anything else. Generally does not vote.
iv) The slum dweller. Has migrated from Bihar, UP, Tamil Nadu. Is divided by religion and language. Sponges on the city, whilst at the same time providing a cheap source of labour for above classes. Always on the lookout for freebies and a high propensity to be argumentative and is the backbone on which the local politician and the gang lords thrive. Will vote for the highest bidder. Provides the crowd to all election meetings.
v) The chawl walas. Each and every suburb of Mumbai has this in large numbers. Pre-occupied with day-to-day living. Only aspiration is to buy a house. In the last few years, with this being out of reach, a high spender on things material. Watches soaps, sports and Barkha Dutt/Rajdeep Sardesai. Has an opinion on everything, joins rallies from time to time. Generally makes it to the polling booth with friends and family.
None of the above have any hidden agenda of trying to help anyone. Help is on if it does not come in the way of what my life is. I do not mind waving a few candles here and there. For 26/11, I am glad it was not me. On 27/11 I have to go to work. If not, I lose my job. Simple. Do not label it saying that Mumbai has ‘bounced’ back to normalcy. As they say in Hindi “Majboori ka naam Mahatma Gandhi”.

My friend, Rajrishi Singhal, in his blog “Monday Mocha”(see link) has written a very nice piece about the poor turnout. The irony is that people who sponge on Mumbai cast most votes. The sad part is that the intelligentsia or the thinking voter is so starved of choice in Mumbai. How do you vote for a Priya Dutt or a Deora? They have all made it big without doing a drop of work. It is not surprising that most MP’s have added so much wealth between two elections, but what is new is the openness about it. And of course, the election commission has added a new dimension. It has said that if there are falsehoods in the ‘affidavits’ filed by the candidates, it is not a big issue!! Wonder why bother with the effin affidavits at all?
In this election, we Manmohan Singh, who wants to be PM but not an MP!! This can happen only in India. A wimp who is scared to face the electorate and a demonstrated rubber stamp is a wannabe PM!! Shame, shame!! Or we have a rabid LK Advani with a team of fanatics, to whom economics is a second priority. Of course, not to mention the ladies’ brigade of Mayawati and Jayalalithaa!! With choices like this, do we want to vote?? Especially if I can use the voting day holiday and club it with a couple of days to get away from the hustle and bustle of it all.