Facts are shaken not stirred

Dear loved ones back home,

I was telling myself to cut down on the email spams that I seem to be generating on your mailbox. The last mail was supposed to be the year end mail and
I was planning to take a long siesta before I come up with some more crappy thoughts. However I couldn't resist my temptation to write this last rambling before I could lose my thought on this issue. I hope you don't mind, but if you do, the delete button is on the top left hand side of the window :)

Some of you took offence to my labelling myself as an NRI. I only meant that I am a NRI (Non Reliable Indian or Not Required in India(n))


Today's problems come from yesterday's "solutions"

I did not mention about Prof. Jim Newton. He is a typical Englishman and in the same league as Prof. Ali (and that's quiet a league!). He teaches us political economics and his narration style usually leaves you at the edge of the seat. He narrates the issues like a story and often he would talk as if he was sitting right next to the prime ministers and finance secretaries when they took decisions.You will find your self clapping at the end of every lecture and silently we would phantom ourselves as a political economics professor.
We had his last class this Monday and as always he signed of with such elan that would put showmen of Bollywood to shame !
here is an excerpt of what he said

Ladies and Gentlemen " Today's problems come from yesterday's "solutions". In the last 3 months we learnt about the politics of economics, politics of religion and politics of nations. I would like to caution you on one of the most fascinating enemies of today's world. Its called the bubble economy. Some liberalist call it the bullish economy. You know you are living in a bubble economy, if you hear yourself saying yes to all my questions. My sympathies and best wishes are with you "

1) Is there an abundance of job and shortage of manpower ? Think of India, Like hell YES!!
2) Does your local banks call you often and entice you to take loans for no or minimum collateral? Like hell YES
3) Has the real estate prices gone by over 3 times in the last 1 year ? Think of Chennai, Bangalore Damn hell YES
4) Do you believe that land prices will never fall ? In a bubble economy people assume that real estate prices can only go up ? YES YES YES
5) Is your share market's PE Ratio more than 15 % ? Importantly has it risen unexplainably in the last year ? I was tired of saying YES by now, BSE PE Ratio is about 27%.

My ears perked up after he said this. The first symptoms could be failing banks, then crashing markets and then finally slashing land prices. All this would render the economy impotent for some time before it can get up and start running again. We have seen it in S'pore, Hong Kong and Japan. We will continue to see it again in many other parts of the world because "Today's problems come from yesterday's solutions". We realize that the root of our difficulties is neither recalcitrant problems or evil adversaries- but ourselves.

You lose if you don't participate, you lose if you participate

I guess each of us have contributed to this inflating giant bubble. This is a kind of self fulfilling prophecy. You lose if you don't participate, you lose if you participate .
I think the winner in this crazy mangle is the one who pricks this bubble. The trick would be to jump out seconds before the bubble bursts, but money controls conscience more than conscience controlling money. A famous investor once said " Be greedy when there is fear, be fearful when there is greed". I am not making a doomsday prophecy nor am I a pessimist clown. However I hope that I have triggered some introspection among some of you. he signed of by saying "Wisdom is knowing when you can't be wise".

Prof. Jim said " During such times reasoning often loses the battle against jingoistic optimism." I agree with Prof. Jim Newton, do you ?


I wouldn't expect a reply for this rambling, but if you do you make me smile :)


Thanks
Arun

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