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Showing posts with the label ECONOMY AND FINANCE

Gold Rush!

Gold touches the new high in Global Market. In fact International Monetary Fund is in need of dollar to lend to some countries to bail out them from crises. So they put around 400 tons of Gold on sale; India bought around 200 tons of gold from IMF with its bulging dollar holdings. This has an impact to offset the dollar price in India. The expectation of other countries especially China may follow India’s suit pushed the price of gold to new high. An ounce of gold sold at a price of $1094.4 in world gold market. Other feels as the major investing funds are expecting a plunge in stock price so they are diverting their investment to gold as a safe heaven. So gold is having more sheen now!

Global Recession

The acute phase of global recession seems to be over; as opined by some experts. Though it is too early to be sure, but there are certain symptoms evident in the global economy that is encouraging. The two major economy in Europe, Germany and France in the quarter ending June’09 have shown come back signs to economical phases. After a long period of recession during this quarter Germany has shown a growth of 0.3% in its national income. Some say this is due to their exports surpassed all imports during this period; during the month of last June, the export growth rate in Germany has touched almost 7%. So it is expected that during the third quarter, Germany’s national income would increase by 1 percent. Another lobby of economic experts held that this growth in German economy is due to increase in governmental spending. If that is true , then obviously it will not be sustainable. The same lobby also opines that the basic reforms in German economy are yet to take place. As banking in...

The sub-prime crisis that triggerd global economic destabilisation

The recent tsunami what has devastated the economy of the United States and with it many other west European economies and finally more or less the global economy as whole. It started from the sub-prime crises. That relates to housing finance in US. In fact we all by now know that. But what is a sub-prime crisis! It is the loan offered at an interest rate which is lower than the prime lending rate, fixed by the central bank. In India, Reserve Bank of India, review and fix it in every quarter. So, when the loans offered at a sub-prime rate of interest went bad (not paid back), that created the crisis. But how come that happened, is bit difficult to understand for them who are only exposed to prudential banking norm as it is in India. We know when we approach for housing loan to any banks or housing loan finance companies, as a security they take the housing unit as a collateral or hypothecation for the same loan. In case the loan going bad, the housing unit is sold off, the money real...

The Global Financial Crisis

Here I give underneath the discussion took place with Bill Moyers with investment guru George Soros; this will give you the idea how global financial crisis is perceived the by him; October 10, 2008 BILL MOYERS:Welcome to the Journal. You are not alone if you are worried about the financial melt down. So is my guest George Soros, one of the world's best known and successful investors, making billions in times of boom or bust. He's been warning for years of a financial melt down fueled by easy credit and sleepy regulation. Now he's out with this timely book, "The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means." In the interest of full disclosure, you should know that I served three years on the board of George Soros' foundation, the Open Society Institute, dealing with such issues as a free press, the rule of law, and human rights. But I've had no involvement in his political activities and nothing to do, with his business i...

INVESTMENT GUIDE PART - II (For young buddies)

In the first part I discussed why I thought of writing this article. The current generations, many with their thick pay packet know not how to spend or invest prudently. Their working conditions will hardly permit them to continue till superannuation. Most of them are likely to take early retirement form their professional life (but not from life). So what harvest they will have depends upon how they reap now. First of all budgeting is most important factor in young professional’s life. Unless you do that you wonder where your money goes! Writing a budget shows actually how do spend and shows the area and how you can control them. You can identify the area needs to be controlled. Never forget to add the expenses you do on shopping and entertainment and include your savings too. Keep a track on your utility bills and keep comparing them. Mind you the plastic money or credit cards are major boosters to spending. Not that they do not have any role to play. At an odd hours, god forbid, ...

INVESTMENT GUIDE PART ONE (FOR THE YOUNG BUDDIES)

I have a son, last year he grabbed his B.Tech degree and a job with a coveted company. Like any father I was happy to see my son being successful in getting degree as well as a job with software industry. Knowing nothing; about the software industry. It was ok, till I saw his job offer letter. I was surprised to find the amount of initial remuneration as a trainee with that company. After serving for no less than 37 years in a nationalize organization, which was reputed as one of the best pay master when I joined; what I get now, my son is likely to get little less than that amount. His mother was too happy finding her only son starting with such a thick pay packet. I thought what goes so high that falls with more acceleration and may get crushed! Naturally I started enquiring about the industry where he found a berth. My enquiry with my contemporaries did not yield much. After all, at the time when they joined the industry, then the software industries was never heard off! However, f...

FREE TRADE REGIME - A TRAP

Free trade regime – what is advocated by the developed countries in WTO; the developing nations are not agreed to that for several reasons. However, let us see how the worked for other countries in the globe who accepted it to the letters. Let us take very recent example of Ghana. Ghana implemented the “liberalized economic system” in the early 8s, at least 10 years before India. The country was projected by the World Bank and the IMF as success story of Africa. But the reality was exactly otherwise. The liberalized economy in Ghana has ruined its agriculture and at the same time failed to boost any substantial manufacturing industries. The mantra of consumerism has failed there too. The poor consumers in Ghana were denied the price stability and pushed to further predicament. The free trade meant lack of price stability for the people of Ghana, since the government has bowed out of price-setting to make way for the market. Likewise the poor producers face highly uncertain prices, they...

STOCK MARKET TREND

Indian stock market after its long journey through bull phase, according to some experts, is entering its tryst with bears with mid to long term association. “We are likely to see a sideways movement for the next one year at least” says Edelweiss Capital Chairman and managing director Rashesh Shah, adding that the next 3-4 months could be tough. “There are no positive triggers in sight. Inflation and crude oil prices are still not under control, and corporate earnings are set to plateau over the next couple of quarters” he added. Bears seem to be tightening their grip over the stock prices, as evident in the recent trend and technical analysis of stock indices, and they are forwarding in for the kill. The micro as well as macro condition are in their favor. On the macro front inflation escalated to a new 16-years high to 12.63%, creating expectation that the interest rate is due for a further hike. The global situation is more gloomy since the experts feel that worst of sub-prime crisi...

GOLD VS LIQUID GOLD

Contrary to the apprehension global oil price instead of going higher is coming down. The reason being he demand supply scenario is changed as the experts believe and off course the speculative forces are receding as well. But there is another story cooking up behind the curtain. It is reported “ a powerful relationship measured by gold/oil ratio (GOR) --- has been a trigger for the sell-off in oil contracts by investors, mainly global hedge funds, on overseas exchanges”—by informed sources. It is believed that in addition to selling oil contracts, these investors have created long positions in gold. It is presumed that yellow metal is relatively inexpensive vis-a-vis the black gold. Most of the analysts think that gold may outperform oil in the near future. This is because yellow metal is considered a hedge against higher inflation, what is driven by higher oil price. Sean Darby, the Asia Pacific strategist of Nomura International says “ It (GOR) normally represents good tool for in...

CURRENT ECONOMIC SCENARIO : INDIA

Sooner the political uncertainty is over; stock indices looking upward, the bulls are back in Indian burses. The FIIs are watching the situation with caution. The macroeconomic condition is still not bright, global crude oil price; reduced corporate earnings, inflationary pressure and rising trend of interest rates are the factors bothering them. It is reported this year FIIs till date have been net sellers amounting $7 billion dollars (Rs 27614.20 crores). However, the stability of government ushers a strong hope for going ahead firmly with more economic reforms. Institutional investors domestic as well as international all are expecting in the same line. It is reported again that Institutional investors invested in gold and companies associated with it have shown good returns. Though the near term sustainability is uncertain but long term trend of their investment is bullish. General public or investors in general may wait for number of Public Sector Undertaking issues in the pipeli...

A NEW FACE OF WORLD BY 2050 A.D

The recent summit of G8 in Hokkaido, Japan is drawing lots of attention world over. G8 is the world elite nation`s club, naturally US being the top dog of it. The summit is currently drawing out the plan to control world`s carbon emission and charting a plan extending up to 2050 A.D. The most develop countries of the world must have say on these issues. After all they consume more, emit more carbon in the atmosphere; so they must ensure other do not follow their suit to further pollute the planet earth. Wise thoughts! No doubt. But 2050A.D is still far off. I doubt by the time we complete half of the current century (though many of us will not be here to witness!), this G8`s program will become irrelevant. Not that I am a soothsayer, Mr., Jim O`Neill, the chief economist of Goldman Sachs has drawn a future economical map of the world that spells so. According to him Brazil, Russia, India and China; these four emerging economy, acronym given to them is Bric, are all the way likely to o...

MULTIPLE CREDIT CARDS HELPS

Inflations is eating away much of your monthly salary check. All the bills, like grocery, garments, launderer`s, conveyance and every other thing are north bound. Every other day they are going high. For you and me, the earning remains same, for many like us there is no scope to increase it . The pensioners, the elderly people who runs on meager pension and interest on their fixed deposit with banks are suffering the most. No immediate sigh is visible for restoration of price stability. Though the economists are forecasting that in the next year, provided the monsoon is good, the inflation is likely to be controlled. Let us hope so. By this time let us see how with multiple credit cards you can meet the cash crunch. Off course, for that there should not be any interest burden. Most of the credit cards companies offer the balance transfer facilities from other credit cards these days. Having multiple credit cards and using them wisely may help you to meet sudden expenditure and enjoy ...

GOLD IS FOR EVER

Inflation is that when too much of money chases too little of things. The gap between demand and supply increases thus causes inflation. During inflation, what happens, you find the price is ever rising with no immediate sign of halt. It may continue for years some time. The flood, draught, or other natural calamities may act as an additive. These days, in the era of globalization it is practically impossible to insulate oneself (read here any country or nation) against global trend. Be it inflation or recession or deflation; when a major economy is struck by any one of them, it has to infect many other countries, whoever has trading relations with them. This is having a cascading affect as those countries would infect in turn others who are in dealings with them. So the chain continues. As this is evident at present, the fuel price hike by OPEC countries has affected developed, developing and poor countries simultaneously. This has triggered the food crisis surreptitiously. Strange is...