So, … … , When’s Judgement Day?

The “fiscal cliff” thingie has come and gone…


People, nothing’s gone.

If something is ailing, it needs to heal, right?

What is required for healing?

Remedial medicine, and time.

Let’s say we take the medicine out of the equation.

Now, what’s left is time.

Would the ailing entity heal, given lots of time, but no medicine?

If disease is not so widespread, and can be expunged over time, then yes, there would be healing, provided all disease-instigating factors are abstained from.

Hey, what exactly are we talking about?

It is no secret that most first-world economies are ailing.

Specifically, the US economy was supposed to be injected with healing measures, which were to take effect from the 1st of Jan., ’13. Financial healing would have meant austerity and a more subdued lifestyle. None of that seems to be happening now. The healing process has been deferred to another time in the future, or so it seems.

You see, people, no one wants austerity. The consumption story must go on…

So now, since the medicine’s been taken out of the equation, is there going to be any healing?

No. Disease-instigating lifestyles are still being followed. Savings are low. Debt with the objective of consumption is still high. How can there be any healing?

Under the circumstances, there can’t.

So, what’re we building up to?

We’re all clear about the fact that consumption makes the world go round. What is the hub of the world’s consumption story? The US. That part of the world which does save, and where there is real growth, well, that part rushes to be a part of the consumption story. It produces cheaply, to sell where there’s consumption, and it sells there expensively. Yeah, like this, healthy economies get dragged into an equation with ailing economies. Soon, the entanglement is so deep, that there’s no turning back for the healthy economy. It catches part of the ailment from the diseased economy. Slowly, non-performing assets of banks in such healthy economies start to grow. The disease is spreading.

Hold on, stay with me, we’re not there yet. Yeah, what are we building up to?

Healthy economies take time to get fully diseased. Here, savings are big, domestic manufacturing is on the rise, and there a healthy demographic dividend too. Buffers galore, the immune system of a healthy economy tries to fight the contagion for the longest time. As entanglement increases, though, buffers deplete, and health staggers. Non-performing assets of banks grow to disturbing levels.

That’s what we are looking out for, when we are invested in a healthy economy which has just started to ail. Needless to say, we pulled out our funds from all ailing economies long back. Our funds are definitely not going back to economies which refuse to take medicine, i.e. which don’t want to be healed. Now, the million dollar question is …

… what’s to be done with our funds in a healthy economy which has just started to become diseased due to unavoidable contagion?

Nothing for now. Watch your investments grow. Eventually, since no one is doing enough to stop the damage and the spread, big-time ailment signs will invariably appear in the currently “healthy” economy, signs that appeared a while back in currently ailing economies. Savings will be disappearing, manufacturing will start to go down, and bad-debt will increase. Define your own threshold level, and go into cash once this is crossed. You might not need to take such a step for many years in a row. Then again, you might need to take such a step sooner than you think, because the ailing mother-consumer economy is capable of pulling everyone down with it, if and when it collapses. And it just stopped taking its medicine…

Let’s get back to your funds. In the scenario that you’ve gone into cash because you weren’t confident about the economy you were invested in, well, what then?

Option 1 is to look for an emerging economy that gains your confidence, and to invest your funds there.

Not everyone is comfortable investing abroad. What if you want to remain in your own economy, which you have now classified as diseased. There’s good news for you. Even in a diseased economy, there are pockets of health. You need to become a part of such pockets, just after a bust. So, remain in cash after a high and till after a bust. Then, when there’s blood on the streets, put your money into companies with zero-debt, a healthy dividend-payout record and a sound, diligent and honest management. Yeah, at a time like that, Equity is an instrument of choice that, over time, will pull your funds out of the gloom and doom.

You’ve put your funds with honest and diligent human capital. The human capital element alone will fight the circumstances, and will rise above them. Then, you’ve entered at throwaway prices, when there was blood on the streets. Congrats, you’ve just set yourself up for huge profit-multiples in the future. And, the companies you’ve put your money with, well, every now and then, they shower a dividend upon you. This is your option 2. Just to share with you, this is my option of choice. I like being near my funds. This way, I can observe them more closely, and manage them properly. I suffer from a case of out of sight, out of mind, as far as funds are concerned. Besides, when funds are overseas, time-differences turn one’s life upside down. This is just a personal choice. You need to take your own decision.

At times like this, bonds are not an option, because many companies can cease to exist in the mayhem, taking your investment principal out with them.

Bullion will give a return as long as there is uncertainty and chaos. Let there be prolonged stability, and you’ll see bullion tanking. Yeah, bullion could be option 3 at such a time. You’ll need to pull out when you see signs of prolonged stability approaching, though.

One can use a bust to pick up cheap real-estate in prime localities. Option 4.

You see, you’ve got options as long as you’re sitting on cash. Thus, first, learn to sit on cash.

Before that, learn to come into cash when you see widespread signs of disease.

Best part is, widespread disease will be accompanied by a big boom before the bust, so you’ll have time to go into cash, and will be ready to pick up quality bargains.

You don’t really care when judgement day is, because your investment strategy has already prepared you for it. You know what to do, and are not afraid. If and when it does come, you are going to take full advantage of it.

Bring it on.


What Does it Take to Decouple?

Is Decoupling a myth?

Why hasn’t any country been able to decouple from collective world economics for longish periods?

What does it take to decouple?

For starters, good governance. Over long periods.

Resources. One needs to have independent resources, as in energy resources. For example, India does not have ample independent oil resources. Going nuclear could make it a stronger candidate for decoupling, but does the country have responsible governance to handle nuclear energy safely? As of now, no.

A conducive business environment is the order of the day. Business needs to thrive. It can only do so, if laws are approved, that are favourable for business. The private sector needs to be allowed to grow wherever possible. Red-tapism and babudom are enemies of decoupling.

To thrive, business needs proper infrastructure. Bottlenecks arise when those responsible for getting this infrastructure in place simutaneously siphon away funds, thereby decreasing the quality of the infrastructure proportionately. Bottlenecks are enemies of decoupling.

Internal demand drives a decoupled economy. The demographic social structure of such an economy allows demand for manufactured goods to blossom.

What kind of a population dynamics caters to this sort of demand creation? One with a healthy demographic pyramid, with the broad pyramid base boasting a large, young consumer base.

This young consumer base is also supposed to be the decoupled economy’s demographic dividend.

Demographic dividends don’t just start existing just like that. They need to be reaped after sowing the proper seeds. An economy needs to first provide proper education and healthcare infrastructure, so that its citizens enjoy a beneficial environment to grow up in, which is when they can go on to become productive citizens.

Savings of productive citizens provide cushion to the decoupled economy. No savings, no cushion. The first Tsunami then destroys the decoupling.

Domestic payment cycles need to be healthy, and not chokingly long.

Imports are a necessary element of trade. Importers should thrive too, but not to the extent of recoupling a decoupled economy.

Then there are moral values. These keep a decoupled economy on track, after everything else is in the correct trajectory. Productive citizens need to do the right thing. Long-term, holistic thinking. No corner-cutting.

Sounds utopic, right?

Well, at least one is allowed to dream!

What Are We, Really? (Part 3)

Heinous crimes … happen in India.

For example the recent Gurgaon r#pe case.

What are we, really?

We were supposed to be reaping a demographic dividend. What happened?

A society that mistreats its women-folk is a sick society.

At its core, the ideology of India is spiritual. And, the driving force of our spiritualism is “Shakti”. The “Shiva” portion is more like a rock of stability. The activity bit is left to Shakti, to rise, purify, and reach Shiva. Shakti is about action. She is the driving spiritual force of India.

So, when from deep inside, our driving force is feminine in nature, and when on the outside, we find ourselves in a male-dominated society, this is a huge paradox that we are forced to deal with.

China has dealt with a similar paradox – with force. Chinese governments, over the ages, have suppressed China’s mandarin-spiritual nature so heavily, that today, it is buried deep, deep down, and is not able to surface. Thus, their paradox is not able to feed off itself, since one pole is out of action. It’s not a solution, but that’s what they’ve done.

In India, spiritualism and basic life go hand in hand. Shakti is beyond suppression. Simultaneously, male domination makes itself felt, in pockets. At every moment, we are faced with our paradox. We need to deal with it, properly, peacefully.

Though the average Indian is dramatic in nature, let’s just get realistic for a while. Which portion of a society is responsible for its continued existence? As in, who bears children?

Bob Marley got his lyrics wrong in one song. “No woman…no KIDS” is what the scene is. No kids … no continued existence … end of your civilization.

A society can only be deemed healthy and fit for continued existence, if it provides a safe and harmonious environment to its women and children. Period.

How are women in India dealing with the paradox?

There is rebellion. Some are able to express themselves. They rebel openly, in their speech, their way of life, dressing-sense, etc. etc. Many others are not able to rebel openly, because of suppression. They rebel in their minds. At the first opportunity, their rebellion will break out.

How is the average dominating male reacting?

There is resentment. Jealousy. Anger. Frustration. Etc. etc. Evolved males are not showing these symptoms. They are dealing with the rebellion peacefully. Unevolved, unemployed, raw / young males are showing the above negative symptoms. They are not able to deal with this new expression of freedom. Their domination is threatened, and their hormones play havoc, which is when they commit heinous crimes, for example r#pe. Unforgivable. Yet, committed.

That’s where we are, people. A two-tier society in every respect. Spiritually (evolved-unevolved divide), structurally (male-female divide), and economically (rich-poor divide). We are still finding ourselves. Please don’t treat us as a mature society.

Specifically, please don’t invest your money here with the idea of steady growth. There will be growth, but it will be hap-hazard, as and when we keep finding ourselves. Many set-backs. Then proper trajectory again. Then road-bumps. And so on, and so forth, till we find ourselves once and for all.

Your money here is set for a volatile ride, till India’s out-of-whack pockets begin to heal.

Things That Make Me Go Ufff!

Pot-holes, potty pancakes, speed-breakers without warning, cars parked in the middle of the road…

Ghost-drivers, dangling electricity wires, open garbage piles, spiky iron-rods dangling from trucks…

Power-cuts, red-tape, policy paralysis, red-siren cars…

Politicians, their “Gandhi-mileage” fixation, mass-corruption, and highly selfish lives…

Negligence to the extent of culpable homicide, fire-brigades arriving late due to pathetic infrastructure, lack of facilities in government schools, over-flooded government hospitals…

Aid that doesn’t reach the needy, lack of development in states far away from the capital, mis-reporting of economic figures to paint good numbers, lack of political will to tackle inflation…

Spurious liquour that kills hundreds, a judicial system that makes you want to stay away, police that intimidates you instead of helping, religion that is used as a weapon…

The police-criminal nexus and profit-sharing, political rallies where “supporters” are paid to join the rally, the bullying of private organizations and non-government organizations by governmental agencies, extortion of small businesses by local government bosses…

Curriculums that cause school-going kids to become sick, no stray-animal policy imposition, lack of sewage infrastructure despite imposition of corresponding taxes, the embracing of nuclear power without possessing the precision and attitude to deal with it safely…

Traffic-cops that are fully focused on their own pockets, millions of bottle-necks that induce road-rage, a totally warped sex-ratio due to generations of male-bias in our society, the black-market in cooking-gas cyllinders…

The 440 V electric bursts that annihilate home-appliances despite surge-protection, slap-fixation by the media that makes one slap look like a million slaps, the fact that we Indians still haven’t learnt to queue up, the lack of realization by us that India is neither an oil-rich nor a water-rich nation…

Spurious everything, rotting food-grain, street-lamps burning in broad daylight, never-ending toll-tax even after an infrastructure has paid for itself…

The dizzy figures of each new corruption scam…

The speed at which an epidemic spreads owing to an overall lack of cleanliness…

A burgeoning population and zilch efforts to harness and enjoy its demographic dividend…

The gross misuse of one’s connections that one has to resort to, to beat the system and sometimes, to survive…

The lack of common-sense that prevails in our society…

These are some of the things that make me go ufff!

It’s because of many of the above-stated issues that the chances of India becoming a super-power in the near future are highly unlikely.

What happens after that depends on how well we tackle these and related matters.

First Step is Yours, India Inc.

Is this the end for Mama & Papa stores?

Foreign direct investment in retail. Tier II and Tier III cities gearing up for multi-brand big-ticket retailers, round 2. Upto 40 % discounts due to deals between manufacturer and retailer. Retailer operates on a 7-month payment cycle. Can Mom & Pop stores compete? Possibly not.

Broadly speaking, we live in two Indias. There’s India Inc., and there’s Bharat. No secret.

Citizens of India Inc. encounter Bharat at every second step. You’ve got bullock-carts, cycles and / or auto-rickshaws slowing down the spanking new highway. Do these bullock-cart fellows pay any road-tax? Power cuts. Countered with generators. Mosquitoes, flies. Long live repellents. Heat. Air-conditioners. Red-tape. Go with the flow. Corruption. Cut a deal. Movie at the mall. Call the manager and reserve the best tickets, away from the locals / villagers. The new fly-pass over your city congests traffic in the side-lanes, adding to the chaos in your city, while providing immense benefits to highway traffic. It’s under-area, which was meant to solve the parking woes of your city, is one long garden. It’s not being used for parking due to the threat of terrorism, as in someone might park a car with a bomb in it. The 10 km long fly-pass might have like 4 cross-to-the-other-side cuts for pedestrians / locals / villagers / labour. Net result is that pedestrians / locals / villagers / labour cross from anywhere, anytime.

You see India Inc., Bharat doesn’t want to be left behind, in any manner. Bharat counters every move of yours with its own unique formula. No cut to cross to the other side of the highway? No problem. Bharat just crosses through the highway. See? You can’t side-step Bharat. There’s only one long-term formula for your success, and that involves the incorporation of Bharat into the scheme of things.

As of now, Bharat is rushing for really cheap goods that look exactly like their expensive originals. As in a 50 $ Blackberry replica. Or a 100 $ i-phone duplicate. Cheap tablets. Dirt-cheap watches that look like Rolexes, Tags and Breguets. There’s no end to it. China will make sure of that. See, Bharat doesn’t want to be left behind. It wants to move with you, but at its own price.

While India Inc. shops with credit cards, Bharat runs a parallel economy. Strictly cash. Come and go. Zilch savings, so no need for banks. If there are savings, there’s some brother in need and will borrow on interest. It’s a bristling parallel economy with unique dynamics.

Does one see a common trajectory between India Inc. and Bharat?

Fortunately, yes. Both are consumers. Also, both are producers. Bharat’s big on agriculture. India Inc. is about tech, innovation, management and competence. Bharat can’t afford most of what India Inc. produces, so it lives on duplicates, or on its own agricultural produce. And India Inc. needs to realize this.

Nobody’s expecting India Inc. to live the life of Bharat more than it needs to. But, and this is a big but, the need of the hour is to incorporate Bharat more and more into India Inc.’s supply chain.

Those are the magic words. If you’re innovative, show it now, India Inc. Your country’s progress is proportional to the progress of Bharat, because Bharat’s numbers are far larger than yours. Slowly, you’ll see, that Bharat will stop slowing you down, as it progresses. The bullock-cart fellow will progress to a tractor. Your cinema-going villager will be more civilized. Bharat will clean-up, and mosquitoes and flies will reduce. A random Bharat citizen will be satisfied enough to not want to bomb his own country. Etc. etc. etc. It’s a process. Yours is the initiation part. Get on with it. Stop cribbing. Incorporate Bharat into your master-plan as much as you can, and sooner than you think, you’ll be enjoying the then EDUCATED and CONSUMING demographic dividend.