Sovereign-Wealth Funds

With the fear of recession, the stocks of banks, financial institutions and several fortune 500 companies are at rock bottom. Nobody wants to speculate the size of bonds write-off and there are not many takers for the stocks now. In such a scenario, several Asian Governments (primarily the Oil rich nations and China) are buying substantial stakes in blue chip firms like RBS (Royal Bank of Scotland, Citibank, Syndicate Bank etc) and preventing bear markets to have a home run.

Unfortunately instead of thanking these brave governments for showing confidence in these troubled times and ensuring that there is sufficient liquidity in the market, the West seems to be scared. EU has imposed several restrictions and disclosure norms on them.

My only response to such practice:
“Beggars cannot be choosers.”

Whenever I see the US consumer spending charts, I am always reminded of the grasss-hopper story. US citizens were happily borrowing and living way beyond their means, while Asian Economies (like ants) were working hard day and night in their sweatshops.

Out of goodwill and to prevent a correction in USD (read devaluation of USD), we bought some USD and kept the prices up. After all a dollar decline helps nobody. Now that even the bond markets has collapsed, Asian Economies have a right to invest their own money in whatever securities they think is safe and serves best the interest of their nations and its political masters. They are doing a service to the world and business communities by infusing cash in the distressed companies and preventing them to go under. While the thankless West is simply making a big fuss out of it.

Whats ironical is that till a few decades ago, US/CIA used to invest in the under-developed world and then used those investments to get a political muscle in the region. There is a long history of developed world engineering a coup just to safeguard these investments. Although till now, no Asian Economy has even attempted such an outragious and selfish act, USA is blaming us for it.

Warren Buffet understands this. Hence he recently said:

“There’s been much talk recently of sovereign wealth funds and how they are buying large pieces of American businesses. This is our doing, not some nefarious plot by foreign governments. Our trade equation guarantees massive foreign investment in the US. When we force-feed $2 billion daily to the rest of the world, they must invest in something here. Why should we complain when they choose stocks over bonds?”

BTW, with Indian Forex reserves crossing 290 Billion Dollars, I think its high time that India should also start a Sovereign Wealth Fund.



Visa confirmed it would proceed with a public offering this spring. The company hopes to raise $18.8 billion, making it America’s biggest IPO. Visa takes fees from credit-card transactions;

Isn’t it odd that the in a time when the entire world is facing Credit Crisis, loan defaults are at an all time high, VISA (which makes all its money from Credit Cards) is confident that it can launch the biggest IPO in American history. Maybe it proves that the present crisis cannot scare off the companies with sound fundamentals.

PS: the default risk is borne entirely by the company issuing credit cards and not VISA. Hence the company could take this audacious step.



Mouse Trap

A mouse looked through the crack in the wall to see the farmer and his wife open a package.

“What food might this contain?” The mouse wondered. He was devastated to
Discover it was a mousetrap.

Retreating to the farmyard, the mouse proclaimed the warning.

“There is a mousetrap in the house! There is a mousetrap in the house!”

The chicken clucked and scratched, raised her head and said, “Mr. Mouse, I can tell you, this is a grave concern to you, but it is of no consequence to me. I cannot be bothered by it.”

The mouse turned to the pig and told him, “There is a mousetrap in the house! There is a mousetrap in the house!”

The pig sympathized, but said, “I am so very sorry, Mr. Mouse, but there is
Nothing I can do about it but pray. Be assured you are in my prayers.”

The mouse turned to the cow and said, “There is a mousetrap in the house!
There is a mousetrap in the house!”

The cow said, “Wow, Mr. Mouse. I’m sorry for you, but it’s no skin off my nose.”

So, the mouse returned to the house, head down and dejected, to face the farmer’s mousetrap alone.

That very night a sound was heard throughout the house like the sound of
a mousetrap catching its prey.

The farmer’s wife rushed to see what was caught. In the darkness, she did not see it was a venomous snake whose tail the trap had caught.

The snake bit the farmer’s wife. The farmer rushed her to the hospital, and she returned home with a fever.

Everyone knows you treat a fever with fresh chicken soup, so the farmer took his hatchet to the farmyard for the soup’s main ingredient.. he slaughtered the chicken to make soup.

But his wife’s sickness continued, so friends and neighbours came to sit with her around the clock. To feed them, the farmer butchered the pig.
The farmer’s wife did not get well; she died. So many people came for her funeral; the farmer had the cow slaughtered to provide enough meat for all of them.

The mouse looked upon it all from his crack in the wall with great sadness.

So, the next time you hear someone is facing a problem and think it doesn’t concern you, remember when one of us is threatened, we are all at risk.

We are all involved in this journey called life. We must keep an eye out for one another and make an extra effort to encourage one another.


Spain (Too much wealth is a problem)

Too little gold/wealth was always scary. The kingdom with empty coffers were always on the verge of annihilation. They never had money to build defenses, raise armies/navies, build cities/roads/ships/canals, import food (in case of drought) or even pay tribute so that the lives of its citizens would be spared. However people never realized that too much wealth can also be a problem.

Spain and Portugal, by the 1500, has discovered massive sources of gold and silver in the New World (Latin America). It won’t be wrong to say that the half of the world’s gold flowed through Spain. Yet in 1557 and then in 1597 Spanish Government was bankrupt.

The influx of gold from Caesar’s campaign in Gaul caused a plunge in the value of gold by over 25%. Its no wonder that the strongest nation in the world faced a civil war soon afterwards which destroyed the republic for ever.

It was only after 1568, that people realized the problems of too much wealth. Jean Bodin (1530-1596), a French lawyer, writing in 1568, while analyzing the the inflationary effect of the (Latin) American money concluded
there were several reasons for the rising prices in the sixteenth century but that “the principal and almost the only one
(which no one has referred to until now) is the abundance of gold and silver, which is today much greater in this kingdom than it was four hundred years ago”.

However, there was little one could do about it. Take Spain for example. There are tonnes of silver and gold in the New World which was getting mined, and shipped to Europe. Because of this sudden influx of gold, nothing was too expensive. The demand and the prices of goods rose many folds, but in that Pre-Industrial age, the production of goods could not be scaled up. Hence, this demand resulted in increase of wages making production to be commercially inviable in the whole of Spain.

The situation was so bad that by 1590, 80 per cent of all goods shipped from Spain to its new colonies were goods that had already been imported from elsewhere in Europe. (source)
England and rest of the Europe on contrast build manufacturing capabilities. They used their colonies as a source of raw materials and a destination for manufactured goods. Making their economy more robust.

This manufacturing capabilities fueled the industrial revolution and made their economies stronger. Hence, even after the loss of major colonies, other European Counties were not suddenly reduced to poverty. In contrast, Spanish grew weaker because of too much wealth. Their wealth forced them to fight too many costly battles which emptied their coffers. The Britisher Privateers disrupted the supply of gold using Guerrilla tactics and weakened the empire. Finally the Spanish Armada was defeated and Spain lost control of the High seas and the New world reducing them to almost nobody in the arena of Wealth, Power and Influence.



3d Gaming

Somebody develop a 3d game using this technology of Headtracking


Great Indian IPO Trick

I loved T.R. Ramaswami’s article in LiveMint so much that I had to post it in ENagar.

Who is the greatest magician? David Copperfield? P.C. Sorcar? There is a new extremely talented magician. In specific, he can (to use a term favored by magicians) “vanish” the law and transform any amount of money as many times as necessary in four months. However, his little (or not-so-little) tricks are as susceptible to deconstruction as those of any other magician’s and can be broken down into sleight of hand (also called prestidigitation orléger de main), misdirection, deception, collusion with a member of the audience, apparatus with secret mechanisms, mirrors, and other tried and tested trickery. Subject to the caveat of a statutory warning (“This trick can be performed only by him or those who share the same surname and should not be attempted by others”). Here’s how to do it:
Step 1: Float a shell company (i.e., a company that exists on paper, is a legal entity but does not have any economic activity). Name the shell company XYZ Ltd. Paid-up capital Rs1 lakh only.
Step 2: Increase the share capital of the shell company from Rs1 lakh to Rs1,000 crore by passing a resolution.
Step 3: Another shell company of the magician, say ABC Ltd, and a listed associate, say PQR Ltd, each invest in the shell company XYZ Ltd. These are nothing but book entries, the financial equivalent of magic.
Step 4: Immediately apply to the court for the merger of XYZ with DEF. The reason for the merger as stated in the application “XYZ has put in considerable efforts in acquiring necessary technical and manpower skills, which are ancillary to the business of DEF which can take benefits of this specialized skill sets and technology available with XYZ to undertake mega power projects and implement them more efficiently and successfully.” This “expertise” has been acquired by the shell company within days of increasing the capital.
The real reason is to comply with regulatory guidelines supposedly designed to prevent fraudulent transactions, but which actually aid and abet them. This relates to recognizing the minimum capital brought in before a public issue as promoters’ contribution. The promoters’ contribution would have to be at many times the face value otherwise. A merger sanctioned by the court qualifies as promoter capital, which it would not have otherwise. The unsuspecting court allows the merger, since both the companies are private companies not knowing that there is no expertise involved except that of manipulating the market for a public offering of shares at a premium of 45 times within a period of four months. The merger is sanctioned.
Step 5: Millions of shares of PQR are allotted to the owners of the shell company, XYZ, and ABC called a Project. (The word ‘project’ could only refer to multiplying money many times in four months.)
Step 6: Engage top-notch intermediaries for a gigantic public issue. Select rumors and stock market manipulation push up the price of all shares in the same industry (there are not many) to dizzy heights to justify the premium and ensure subscription. Advertise aggressively and hijack the caller ring tone of captive telecom customers without their consent to play the advertisement.
Step 7: Engage a top-notch lawyer to obtain a blanket gag order from the highest court against various  petitions  in  various  courts.
Step 8: Get the issue subscribed and have it quoted at a further premium to the initial public offering (IPO) price in grey market operations.
Step 9: Say “Oops” and make pious statements of long-term returns when the market crashes.
And all this is within the “law”!!
Where are all the investor protector forums and champions?

Humor Investing

Sub-Prime mess Explained

Here is a wonderful presentation explaining what actually caused the sub-prime mess.

courtesy Jonathan J. Miller


Eunuchs to dance in Bangalore discos

I was reading this news in NDTV and was kind of appalled.
Any ways, I hope it a a temporary phenomenon and the Eunuchs don’t stay there for ever.

PS: sorry if I come out insensitive in this post, but please understand I really feel uneasy around these people and had a couple of shocking prior experiences.


Kumar Parvat TREK..Experiences and Lessons learnt!

Train journey was good.! Few of us were missing the late night sync up calls though! We reached the place around 7’o clock in the morning.A jeep was hired from the station to Subramanya…That was a thrilling roller coaster ride..The driver seemed to have undergone Coaching for F1 racing! Then, we rushed into a nearby hotel and had breakfast. Filled up our bags with everything possible..little did we realize that they would become the biggest burden for the rest of the day..!
The mountain looked so inviting when we saw it from the bottom…Everybody started the journey with a smile on their face…But none knew they would curse it so much in the coming few hours..!
The journey was exciting in the beginning.. Green forest around and a thin damp path…Wow..!!
After 1/2 hr, Shibu the guy with the heaviest bag(14.5 kg) was down first..! So few of us unloaded the bag and threw away few extra stuff! BTW..FYI..He had Smirnoff, Teacher’s, Antiquity, 3 60ml bottles of VODKA and Red Bull, SOYA drink and many more( these are few names I got to hear) from him…!
Stopping now and then, having Glucon-D, lemon water, Arun’s cucumber, Cashews, Grapes,Oranges etc was simply too good..!
The scenic beauty was no longer appreciated after some time and a glimpse of the Bhat’s house was the most awaited one..!The fastest people could reach the Bhat’s house at around 12.30pm and the rest followed them. Hogged food there..rested for a while! We discussed a lot, gave up the idea of cooking on the top and left behind all the vegetables, rice, etc that we had got with us and resumed the journey again..!
The second half of the journey was terrible I shud say with the destination being right in front of us and we struggling to reach it..!
Nisar and Sathya, the most energetic guys in the group had almost reached the top and slept for an hour waiting for the rest of us..! Half of the group managed to reach the Pushpagiri top( one next to Kumara Parvat) by 6’o clock!
Then starts the camping preparation!…Few of us stayed back to accompany the ones behind and the rest went ahead looking for a right place for the camp. A small water body is what we wanted and we had to even crawl on a huge boulder for that. Manoj and Sathya had found a good place for camping and settling for the night. Then, Manoj and Nisar take up the duty of helping people crawl up the boulder and Ankur and Sathya pitching the tents in the meanwhile.Finally we reached the camp at 8’o clock in the night.
Now starts the hunt for firewood..! few of us were successful in getting firewood and boiled our Ready-to-eat’s and hogged food like we’ve never seen before..! A special mention , Shibu, the man of class had non-veg biryani for the night..!!
We had 5 tents pitched, played PING-PONG for a while and then the terrible, chill, windy night! everybody tried to sleep in their tents but hardly anyone could sleep..!!
We got up as soon as possible in the morning being extremely happy that the night is over.! Gathered firewood and lit fire to keep ourselves warm! Tried to make breakfast too but were unsuccessful!! We then went to our final destination, the top of Kumara Parvat(you could see the flag in the photograph). You can observe the triumph in everyone’s face..:D!
Then, packed up all our things, cleaned the place and started the journey back! Climbing down was much less tiring than climbing up but toes were badly aching!! few of us reached the Bhat’s place at around 12.00 and the rest followed after an hour. Had food there, collected the items left in the Bhat’s place and started the journey down with the heavy bags again! Time just flew by and we really dint knew how we could make it to the bottom again..! So the journey was both fantastic and deadly!!

The greatest achievement according to me is that all 13 of us (mostly first timers) reached the top and camped on the Peak.

Some famous one liners:
Every gram of weight matters !
one more VODKA please..!
– Aswani

Some snaps (taken by an unprofessional amateur) can be found here

Cartoons Investing

What are stock market Tips?

Sometimes this is the news which comes straight from the horses mouth.

courtesy Karthi