"All paid jobs absorb and
degrade the mind."
—Aristotle (Greek, 384-322BC)
Word for the day
Timocracy (n)
A form of government in
which love of honor is the dominant motive of the rulers.
(Source: Dictionary.com)
Malice towards
none
RSS chief is addressing
investors' conferences in Mumbai, calling for end to redundant traditions and
religious practices, wants review of reservation practices - change is in the
air! or is it?
Staying put for good times
The narrative of Bihar
election makes one thing clear — "Dynasty" as an electoral plank has
been rendered completely redundant. No one has ever uttered this word in the
campaign so far.
Though Mulayam Singh Yadav
has entered the fray with much fanfare, Mayawati is conspicuous by her complete
absence in a rather prominent dalit battle. Is she strategically saving her
resources for UP battle due in March 2017, or ....?
All those busy writing epitaph of Chinese economy may note that
the colossal manufacturing infrastructure and skill set China has created over
past two decade is for real. As in India, the people who have been lifted out
of abysmal poverty are real. The banks may fail. Large corporations may go
bankrupt and wound up. But roads, railways, power plants, factories, houses,
ports would remain.
In India, today investors may not wish to invest in equity of
troubled companies like JPA, GMR, GVK, Lanco, etc, but there are buyers of the
assets created by these company. Likewise, the Chinese equities may be going
out of favor but Chinese assets are not.
So, as a financial investor I may be feeling the pain as the
bubble completes the burst and valuations correct to more realistic levels, I
am certainly staying put for good times that would inevitably follow.
FM exudes confidence on growth, GST roll out as government rolls
out 24X7 power for all in 3 states.
Oil speculators bullish after 2months as supplies fall. Fed
decision to postpone the "liftoff" raises global growth concerns
afresh.
In a recent interview to Indian media, the legendary Vinod Khosla
expounded how reality sometimes diverges from stock market valuations.
He very rightly observed that "If you look at internet
traffic through the bubble in the US dotcom bust, you can't tell where it is.
Because internet usage kept going up. It didn't crash the day stock prices
crashed. Because prices crashed, it doesn't mean people stop using Facebook. So
how do you measure a bubble? Is it the reality of usage or that of valuation.
In a valuation sense, you get lots of bubbles. In a real usage sense, you
don't!"
I wrote a year ago (see here),
bubbles occur when the stakeholders get tired, frustrated and exhausted from
prolonged economic weakness. At that point in time, they muster all their
courage and supported by the 'authority' do things they would never do in
normal times. They do excessive and seemingly irrational borrowing, investing
and spending. Capacities are built to the scale unfathomable during normal
times.
The good that emerges from these bubbles is usually shared by
many. However the bad that emerges out of bust of such bubbles is usually
shared only by the financial investors who invariably end up poorer after every
such burst.
To correlate with what I am saying - imagine would India be a ITeS
superpower without Y2K or technology bubble during late 1990s! Would we build
so many houses, roads, malls, power plants, cement plants etc. during last
decade but for a credit bubble! Would capital be so easily and cheaply
available to Indian entrepreneurs without the a QE bubble in the west!
The stock valuations of many real estate and infra developers,
lenders and asset owners may not be fraction of what it was in late 2007, but
all those assets created by them are there for us to use.
In my view, the valuation bubble in China (or bust of that) must
be seen in this light.
All those busy writing epitaph of Chinese economy may note that
the colossal manufacturing infrastructure and skill set China has created over
past two decade is for real. As in India, the people who have been lifted out
of abysmal poverty are real. The banks may fail. Large corporations may go
bankrupt and wound up. But roads, railways, power plants, factories, houses,
ports would remain.
These will not only support Chinese economy for decades but also
support capital starved African, East European and Asian economies through
leasing their manufacturing facilities to them.
In India, today investors may not wish to invest in equity of
troubled companies like JPA, GMR, GVK, Lanco, etc, but there are buyers of the
assets created by these company.
Likewise, the Chinese equities may be going out of favor but
Chinese assets are not.
So, as a financial investor I may be feeling the pain as the
bubble completes the burst and valuations correct to more realistic levels, I
am certainly staying put for good times that would inevitably follow.
