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India industrial production data (May 12)

If markets are looking forward to a favorable industrial production (IIP) data as an indicator going forward then there may not be anything surprising for them.
With all the negative indicators around us and especially the central government’s steps to curb inflation, naturally Industrial production data will take a beating.

What the government has done so far is a necessary fist and must step even though the results will not be bear any fruits. The next logical step is to attack the massive trade deficit in the light of soaring crude prices. There are many things that our government and citizens can do to collectively fight this inflation menace.

1) Government should not subsidise petrol at the pump. Let market forces dictate the price at the pump. This step requires tremendous courage by the existing government especially in an election year.
2) Indians should rely more on mass public transportaion system and reduce oil consumption.
3) Encourage people to move towards natural gas alternative by building required infrastructure.

All the above steps will result in closing the trade deficit gap and help the government in fighting inlation and spend the foreign exchange in helping agricultural sector to become self sufficient in food grains.

Filed under: Finance India, India blogs, Indian Bloggers, , , , , , , ,

Super spike theory from Goldman Sachs: Oil to $250; Its a Sham.

Interesting read from Rediff: http://www.rediff.com/money/2008/jun/02mrv.htm

Why would a brokerage firm such as Goldman sachs dole out a free bee analysis to the world, instead of privately telling its own clients for a fee to take long positions in oil ?
Goldman sachs didn’t share its inside information on subprime fallout few years ago? It privately shorted exotic derivatives and banks that were heavily immersed in subprime mess. It may have also shared this information with all its fee paying clients to make money out of americans misery.

I bet Goldman sachs is on the wrong side in Oil trade and hence the free super spike analysis. This is the best indicator that Oil is peaked and is on a downward trend.

Oil may go up based soley on dollar weakness and not on demand. American demand for OIL is more than that of combined demand of China( one third) and India (one eigth). So emerging countries are not responsible for spike in Oil prices. Also OPEC countries should accept basket of currencies for their oil as Dollar may loose its sheen and may be worthless in future.
If, OPEC countries keep on increasing price of OIL, their imports may cost more as food grain producing countries may not export them at all. This may force OPEC countries do barter trade
food for oil, services for oil, metals for OIL type trades instead of dollars for oil.
OPEC countries are piling dollars which may not buy much for them in future.

Filed under: Finance India, India blogs, Indian Bloggers, , , , , ,

Food inflation: Sum of all opinions

Food inflation is a result of failure of many things over many years by all countries.
Let me list few which i think are the reasons for food inflation.

Propping up of US Dollar: Many world economies are dependent on US consumers and have more or less invesnted policies to keep Dollar stronger. They did this to be able to profitably expor to United States. This encouraged Americans to spend beyond their means causing inflation to rise.
Weak Dollar:Due to globalization and free flow of money among many countries caused mayem in financial markets. Cheap money started flowing into america and thus credit was available easiliy. The finacial markets collapse due to exotic derivatives (uregulated) and collapse of US economy (subprime mess) is causing US Dollar to fall. With peak debts, american consumers appetite to take more debt is weakened. US is printing dollars to avert economic collapse and causing further downfall of US dollar. This is pushing the crude higher and higher thus forcing US to divert a thrid of corn production to ethanol production.
Corn is consumed daily by americans and is also food for cattle. This pushed the costs of feeding cattle thus causing prices of chicken, beef and dairy products to rise.
Rising crude prices hit manufactureres, farmers and everybody alike and thus the food inflation.
Failure of Doha talks: Countries have to come together and continue where they left of. There is no alternative to sit and talk and succeed.
Expanding middle class in emerging markets:When demand increases, supply has to increase. If supply can’t meet the demand then prices rise.
I don’t see why suppliers are not ramping up production when there is an onslaught of demand?
India and China naturally want to stop exporting food grains for domestic consumption and that is what they are doing. Countries like Bangladesh which depend on Rice imports from India are sufferring.

What is the solution?
US should increase public transportaion system to meet its energy demands and curb rising use of GAS (petrol) by automobiles.
India and China should drop subsidies on crude for domestic consumption. This is causing enormous strain on our economy and is erroneously making millions to fell that they can afford buying cars.
Once the subsidy is done away with, only people who can afford will buy automobiles.
This is will result in drop in demand for crude and OPEC countries will fall in line to drop the crude prices.

Bush speech on food inflation: President Bush didn’t blame India and China for the food inflation. Contrary to that he complemented the phenominal growth of Indian middle class and an oppurtunity to increase production to meet the demand from rising middle class population.
When everybody said that diverting corn production to biofuel production caused food inflation, he wronged them and gave more reasons for food inflation.

Thanks

Filed under: Finance India, India blogs, Indian Bloggers, , , , , , , ,

Banning TimesOfIndia newspaper will be the best thing to happen to India

This newspaper which is of third grade quality and quantity of world’s total ewaste is spreading rumours.
The latest rumour is “bush blames India for food inflation”.
Then they carry another news headline countering the blame with stats like “US consumption of food is 5 times per capita of India”. Then they carry news of Political parties fuming over such comments from Bush.
To complete the rumour and stay away from crisis (clearing the newspaper’s name from this whole rumour piece), they carry another news item which clearly states that Bush statements were actually complemeting Indias growth story and not complaining.

I really feel pity on this newspaper and its shareholders for carrying such lousy stories with rumours, only to increase web impressions and harming India’s relationship with US.
This will also send a wrong message about Indians ability to interpret the political messages from leaders.

There are many takeways from these rumours going around for the last 2-3 days in TimesOfIndia.
1) Political parties like BJP who reacted angrily to comments from BUSH, didn’t read the BUSH statements. If they did read the whole speech from BUSh, then i doubt their ability to run this country.
2) TimesOfIndia needs to show more care in putting out the stories and not actually spread rumours.
3) Readers should be more careful in interpreting these stories.

Nowhere in the speech, President BUSH was complaining and blaming India for food crisis.
His speech was concentrated on both India and China the emerging nations and their citizens rising propserity and their carving for better diet. He said those in a complementing way because Western countries can start exporting food grains to India.

However our TOI as we all know its prowess of lack of English skills or lack of understanding American english misinterpreted or should i say twisted the material facts from the speech.

Shame on you TimesOfIndia. I denounce this newspaper and doubt its ability as a media organization in bringing news to us.
Times Of India has degraded to a pathetic level, stooped too low to create a circus out of a good speech from Bush.
I also denounce BJP and CPI[M] for their reactions unnecessarily harming our relations with US.
Also read, how PTI, NDTV and TimesOfIndia distorted UNCTAD report.
https://enewss.wordpress.com/2008/06/04/unctad-blames-india-china-for-rising-food-prices-reports-pti/

Links:
http://timesofindia.indiatimes.com/Bush_comments_aimed_at_mounting_pressure_on_India_BJP/articleshow/3009599.cms
http://timesofindia.indiatimes.com/Now_Bush_blames_India_for_rising_food_prices/rssarticleshow/3006775.cms
http://timesofindia.indiatimes.com/Earth/Developmental_Issues/US_eats_5_times_more_than_India_per_capita/rssarticleshow/3008449.cms
http://timesofindia.indiatimes.com/Bush_remarks_enrage_political_parties/articleshow/3007695.cms
http://timesofindia.indiatimes.com/India/Bush_bites_into_food_debate_netas_boil/articleshow/3008518.cms

Filed under: Finance India, India blogs, Indian Bloggers, , , , , , , , , , , , ,

Reliance Power IPO money in Mutual Funds?

Reliance Power IPO which raised RS 11,500 CR in IPO has put to good use only RS 25 cr so far.
Where did the remain money go?
As per the latest Press release, they have invested all of the remaining money in MFs, derivative products from banks and some in the savings.
As per their press release, these investments have earned interest of RS 94.6 crore.

At this point iam concerned on several fronts with the latest press release.
1) I hate to see my IPO money sitting in several investment funds and or banks. I want to see my IPO money used for the purpose they have declared in their IPO prospectus.
2) Depending on when they started investing the IPO money, iam concerned about the losses it may have suffered due to recent market crashes and crash of derivatives market. Almost all of the derivative (exotic and difficult to understand products) are worthless at this point and iam concerned that Reliance Power IPO money may have also experienced losses.

Did Releiance power company executives sought permission before putting our money in risky portfolios? How long will the IPO money stay invested? What is the current market value of all its investments?

Filed under: Finance India, India blogs, Indian Bloggers, , ,

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