Wednesday, May 30, 2012

Go on and read all the 3 parts you will get links there itself

It comforts you :)

Guys! hope you all would agree when I say  we feel happy if somebody shares your views on important such view is pasted here...I took it from the blog India housing bubble the url is shared below..


RE is in a clear bubble and the govt. should have allowed it to go bust in 2008 but they did not. Instead, they let it blow even bigger. And that is how bubbles operate - when everyone thinks its bust time, they grow even bigger and suck in even more number of people. The resulting clean up takes even longer and is even more painful.

Look at equity markets. If they rally 25% in the next 6 months even then they will be at the same level as they were 5 years backk in Jan 2008. So no returns for 5 years even in nominal terms.

The same things is coming for RE

eal estate is in a bubble by design, not by co-incidence.

The thing is, if you are the government of any nation on this planet today, you have to show literally crazed growth rates as a part and parcel of "globalism", and the usual way to do that is to emit as much money as you can from your central banks.

Unfortunately, this money, if uncontrolled, causes a rather unpleasant effect called price inflation, which governments understandably are scared of, given that unleashing inflation on the poverty stricken masses is a certain recipe for regime change at best, and the guillotine at worst.

Diverting this newly minted money to avenues like real estate is the only way that countries may print up wads of cash without causing significant inflation in prices of day to day goods.

Thus, governments create artificial incentives, such as tax breaks and so on for people buying houses to prop up and sustain real estate.

It is no wonder then that real estate bubbles are so resilient, and when they burst, they usually take down the entire national economy with them. And so, governments must protect real estate prices at all cost.

This is like riding a tiger - once you hop on, there is no way for you to hop off because the moment you do, you will become the tiger's dinner. The ride continues to get wilder, but you hang on for dear life.

But then an external event happens - the tiger slows down, or stumbles, or speeds up, or takes a turn, or whatever, and you lose your balance and fall. You get eaten, but you can then blame it on the external event.

Thus, the fundamentally flawed idea of the Euro can be safely blamed on Greece; or the fundamentally flawed idea of inflation of the money supply can blamed on the subprime crisis.

With this background, I trust you realize that the situation is this: If you want to get your real estate prices under control, you will have to reduce your rate of inflating the money supply.

If you do that, you will kill the general economy - real estate loans will die, taking many banks to the grave with them, exports will plunge because of a stronger currency; NRIs will find it harder to invest in India and so on.

But you will save the rupee.

Or continue on the same path, real estate in nominal terms will go up; exports will boom, NRI money will flow in again and so on.

But you will kill the rupee.

Governments rarely choose the first option; they continue to destroy the currency till real estate prices reach levels that are so high that they naturally correct; and at that time it becomes too late to save real estate or the currency.

Then they drag their feet, hoping for either a scapegoat to lay the blame on, or a miracle to save their asses.

If the populace is especially docile, like in Japan, you get lost decades, wherein everything stagnates for extended periods of time and people generally experience creeping reductions in their purchasing power.

In India, you can bet that the government will not let real estate prices come down in nominal (i.e., Rupee) terms. They will weaken the currency till they can get away with it, i.e., till foreign governments refuse to lend or till the rise in import prices threatens to destabilize the coalitions.

Then they'll try to hop off the tiger by reducing the rate of money printing, but that very action will be the trigger for a massive real estate crash.

The message will go out to the marginal real estate speculator that real estate prices will stagnate or fall; and that will coerce him not to buy; causing a real fall; causing others to not buy, causing a steeper fall... and so on.

Engineers know this as a positive feedback loop, and once this happens, there is no way to avoid instability or complete failure of the system.

This is the simplest explanation that I can come up with for what will happen. Bubble deniers will no doubt bring in many counter arguments - such as demographics, such as corruption, black money, and so on; but this is the mechanism of a bubble burst, and every one bubbles past has burst this exact way, regardless of all other variables.

The question is what are you going to do.

Sunday, May 27, 2012

Huge fall - Lottery

If you are bear, this week it is worth to try put options.

FII's sold huge index futures this month and if this is what I think, we will see huge fall in this week in Indian Share markets. 4700 will be broken on the downside. Remember 4700 put is 4.75 Rs and 4800 put is 14 Rs now.

I bet Rs.5000/- on 4800 put. Let us see.

Wednesday, May 23, 2012

This is too much guys

I read several news titles like ' RBI watches as Re slides', ' RBI could not control rupee slide', 'Is RBI failing' blah blah.

The same idiots arm twisted RBI into cutting interest rates mindlessly and stopped RBI from raising interest rates to adequate levels. Now we are paying the price for assuming 9% growth is given for India by lord Rama until sensex crosses 60000. Sorry guys. That is wrong.

Our woes has just started. The corporates are bleeding. Behind their smiles hidden are the fears of catapulation.  Blaming RBI is not the solution. Have we ever allowed to do its duty? Yes! true they got carried away little bit. But should we also agree that we are also part of the problem?

whenever they raise interest rates, we discouraged them by saying it is bad. We are so used to easy money. We ignored the guys who really saves. We proudly talks about Indian savings but offlate we forget the savings and we absolutely have no rights to criticize US and European countries. We are not giving any benefits to the guys who are depositing their hard earned money into bank. Believe me Guys, RE cannot appreciate continously.

Are we better than US Federal Reserve in printing? we know the answer right?

I wonder where these corporate brokers who pitched for rate cuts are hiding now? Mr. Bajaj, Mr. Keki Mistry, Ms, Shika, Mr.K.V.Kamath. ( yeah K.V.Kamath is busy in destroying Infy).

I hope rate cutting is not an option in RBI's armoury now. 

Sunday, May 20, 2012

Why the f*** we want high interest rates?

These days everybody used to cheap money. Government used all its might in the past decade by fooling people and now people are very happy with high inflation regime.  The same people ridiculed Zimbabwe when they print 1 million currency note.

When we pitch for high interest, we are being looked like a villian who comes to crash their party. Excuse me. your party is already done with. Now it is pay back time. Today we will rewind some of the basic economics

1. Capial should not be created by central banks. Capital moves from savers. People save from their earnings by way of bank deposits and it moves from banks to business.
2. The cost of capital should be always 2% more than the prevailing inflation.
3. In India as per govt figures inflation is 7.5%. Consumer inflation says it is 10.5.
4. We all know, real inflation is more than govt figures.And world over countries use consumer inflation and not like India where we use WPI.
5. Taking all into accounts, I liberally give the benefit of doubt to govt, and assume real infation is somewhere near 10%.
6. Based on this fact, interest rate should be atleast 12% for somebody who wants to save. if it is not so, can I say RBI is doing a fraud on the system and government is cheating the common man who comes and deposit his hard earned money in Bank?

We are atleast 4% down from the real interest rates. Can any economist reply to me. It is an open challenge.

Thursday, May 17, 2012

//When asked about the range of the rupee, Axis Bank Managing Director and Chief Executive Shikha Sharma said it (54 to a dollar) is a "fair level."//

We need to have few heads examined LOL

Anybody to know little common sense would know what is the fair value of Rupee. Unless you increase interest rates by atleast 3 percent you cannot save Rupee from nosediving to 60+...

The same guys vehemently argued for interest rate cut and got it. Sadly enough they did not pass on it to customers. Now they are telling Rupee value is fair enough. 

I wonder what they are going to say their balance sheets when RE crashes?

Monday, May 14, 2012

Will subbarao think?

Today's inflation data is an eye opener to many. Double digit food inflation is not ajoke.government is drinking blood of innocent people to benefit real estate and corporate mafia.

Simple solution continued....

Corporate mafia are crying for capital. I will tell a simple, yet powerful solution. But it may be painful for few but believe me  nobody will go jobless when you follow this.


Yeah! it may be painful for some banks. But may not be for common people and country. The money hoarded in unsold apartments will come to the circulation and all the froths will be eliminated. It is not done now for obvious reasons as every politician irrespective of party hoarded their unaccounted money in real estate sector.

To make matters worst we not even ready to discuss this.

Atleast we can make a start by banning POA sales by following the foot steps of Delhi state.

  ( to be continued)

Saturday, May 12, 2012

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.


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)

Friday, May 4, 2012

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

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?

Thursday, May 3, 2012

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?