Everyone has some or other thing in his or her 'must do' list. I had fascination of going to a developed country since my college days. Finally i got a chance of going abroad and this chance was not for 5 or 6 months but was as a permanent job in Singapore. It's been around 6 months in Singapore. I thought to write how good or bad it feels now.
When i came to Singapore, i took a cab from Singapore airport to my hotel. I was looking at the city infrastructure and was pleasantly surprised looking at it. My journey had just begun and good/bad things were waiting for me. Some of the things i like and some of them i do not at all.
Let me start with good things first. Best thing i like about Singapore is it's weather and pollution level. Both complement each other. I was surprised to see and was wondering how can a country manage such a low pollution level. Pollution level of Singapore is 40. Below 50 is considered to be very healthy. In fact below 100 is considered to be good. Above 150 is considered very bad for health. Most of the Indian cities have pollution levels greater than 200.
So how do they actually maintain it. Well, government of these countries pose rules which promote people to use public transport than personal vehicles. For example government imposes very high taxes for possessing personal vehicles. Other than that government improves public transport facility.
Apart from this i am impressed with overall infrastructure, very low tax rates and overall standard of living. These things attract investors and others to come to the country and contribute to the economy.
Now there are some bad things also which, according to me, will over pass good things. One thing which i do not at all like is food. Although everyone may not agree with this but i am a vegetarian and do not like food served here at all. Given the fact that i am fond of Chinese food, i never get satisfied with it and never like to have it here. In starting i could not even bear the smell of food while passing by restaurants and food courts. I literally felt vomiting while passing by but now i am used to of this smell. Until some time back we had very few options of having lunch but now we have found few more. Last week we had to go for business lunch with our team which has some localities and few from other countries also. We decided to go to a Korean restaurant. Although we ordered vegetarian food, i did not like it at all. I could not develop taste for local food and i think i will never be able to. On the other hand, i have got benefit of it also as i am now slim and fit :-) but my fitness is because of my jogging. There is a nice beach and park near our home. We usually go there for jogging and having fun.
apart from food one more thing i do not like here is we have very few things to do on week ends. I agree that it totally depends on you how you enjoy your life but i feel that we have very little scope of having fun. First of all we have very limited group of people and some how could not expand it so having group activities is not possible. Secondly in India we could go to a good restaurant, cafe and could spend time but here because of food restrictions this option is also eliminated. Although night life in Singapore is really good but having enjoyed it in starting one or two months i started feeling bored from it.
Last thing to mention is i feel more distant from my home. In fact i feel more distance from my country and never feel at home in Singapore.
So all in all i would say: "Sare jahan se accha Hindustan hamara"
Monday, October 20, 2008
Tuesday, October 14, 2008
Financial crisis: How it started and propageted
Greed is the main reason of so may problems in everybody's life. Greed sometimes incurs small losses and sometimes can incur huuuuuuuge. This greed is the root cause of recent financial crisis. It was greed of individuals and that of investment banks which caused financial turmoil across the world.
So how did it started and what was the flaw in basic financial system. Banks provide loans to individuals in lieu of some mortgage from borrower's side. Investment banks got this fantastic idea of earning money according to which they will pay all the money to the bank which bank provided to a borrower along with interest rate and they will take mortgages from bank in lieu of that. After taking mortgages from banks, investment banks created one special type of debt instrument and released it in the market to public at a little bit lower interest rate than what they paid to banks. I hope you are not getting confused. Lets take one example to illustrate this:
If a person A borrows 2 million from bank B at 10% interest rate then investment bank will give 2 million to the bank in one shot along with 7 to 8% interest. Now benefit which bank will get in this process is that they got their full money immediately along with interest and they can again lend this money to some other borrower. And this process repeats. Again bank will lend this money to someone else and again will sell it to investment banks. Investment banks will raise debt instrument from mortgage and will sell it to public. Now there are few questions here.
What is benefit to banks in doing so? Well, banks immediately get the money which they landed along with interest and they can again lend money which they got from investment banks.
What is benefit to investment banks in doing so? They gave money to banks which is 1-2% lesser than that of actual interest rate. There is more benefit to them which i will explain later.
Immediate consequence of this was sharp rise in real estate prices and loan defaulters. Since this cycle of lending was repeating again and again, there was lot of money available for lending and lot of people were putting their money in real estate hence it's prices were shooting up. Also number of defaulters were increasing because banks wanted to lend money (since they had access liquidity) as much as possible so they were not checking financial status of borrower properly.
hat were investment banks doing of mortgages given by borrowers and how were they getting money which they were supplying to banks. Investment banks created a special kind of debt instrument from mortgages and released it in the market. People were getting very little interest rates in their bank deposits and investment banks were ready to give them more than that so public gave money to investment banks in lieu of debt instruments at a interest rate which was more than that of public was getting from banks but lesser than that of investment banks paid to banks. This was another benefit which investment banks had.
There was one more entity involved in this cycle. That was insurance firms. Investment banks got insurance of borrowers' mortgages which they got from banks.
This cycle was accelerating itself. Outputs of this cycle were acting as inputs to accelerate the cycle. For example money was taken from public through debt instrument path and it was reaching to them through bank path.
This wheel was rotating very fast but things started getting worse. Defaulters started growing and insurance companies started going into BIG losses. This in turn reduced value of debt instruments and investment banks started going into losses. Public also started going into loss because value of debt instruments decreased. This situation started worsening and today we see consequences of this. Lehman failed and AIG also failed because Lehman had got insurance from AIG. This whole cycle broke into a big financial crisis which we see now and it all happened because of greed of individuals and that of investment banks.
So how did it started and what was the flaw in basic financial system. Banks provide loans to individuals in lieu of some mortgage from borrower's side. Investment banks got this fantastic idea of earning money according to which they will pay all the money to the bank which bank provided to a borrower along with interest rate and they will take mortgages from bank in lieu of that. After taking mortgages from banks, investment banks created one special type of debt instrument and released it in the market to public at a little bit lower interest rate than what they paid to banks. I hope you are not getting confused. Lets take one example to illustrate this:
If a person A borrows 2 million from bank B at 10% interest rate then investment bank will give 2 million to the bank in one shot along with 7 to 8% interest. Now benefit which bank will get in this process is that they got their full money immediately along with interest and they can again lend this money to some other borrower. And this process repeats. Again bank will lend this money to someone else and again will sell it to investment banks. Investment banks will raise debt instrument from mortgage and will sell it to public. Now there are few questions here.
What is benefit to banks in doing so? Well, banks immediately get the money which they landed along with interest and they can again lend money which they got from investment banks.
What is benefit to investment banks in doing so? They gave money to banks which is 1-2% lesser than that of actual interest rate. There is more benefit to them which i will explain later.
Immediate consequence of this was sharp rise in real estate prices and loan defaulters. Since this cycle of lending was repeating again and again, there was lot of money available for lending and lot of people were putting their money in real estate hence it's prices were shooting up. Also number of defaulters were increasing because banks wanted to lend money (since they had access liquidity) as much as possible so they were not checking financial status of borrower properly.
hat were investment banks doing of mortgages given by borrowers and how were they getting money which they were supplying to banks. Investment banks created a special kind of debt instrument from mortgages and released it in the market. People were getting very little interest rates in their bank deposits and investment banks were ready to give them more than that so public gave money to investment banks in lieu of debt instruments at a interest rate which was more than that of public was getting from banks but lesser than that of investment banks paid to banks. This was another benefit which investment banks had.
There was one more entity involved in this cycle. That was insurance firms. Investment banks got insurance of borrowers' mortgages which they got from banks.
This cycle was accelerating itself. Outputs of this cycle were acting as inputs to accelerate the cycle. For example money was taken from public through debt instrument path and it was reaching to them through bank path.
This wheel was rotating very fast but things started getting worse. Defaulters started growing and insurance companies started going into BIG losses. This in turn reduced value of debt instruments and investment banks started going into losses. Public also started going into loss because value of debt instruments decreased. This situation started worsening and today we see consequences of this. Lehman failed and AIG also failed because Lehman had got insurance from AIG. This whole cycle broke into a big financial crisis which we see now and it all happened because of greed of individuals and that of investment banks.
Friday, October 10, 2008
How much people reveal about them
I was thinking about this and i was wondering how much people actually reveal some info to others which they may not want to share with everyone but their close ones. There may be some information which they do not even want to shares with anyone irrespective of how close any person is.
So if we classify personal information of an individual then there will be three categories.
1. Information which they do not mind sharing with anyone.
2. Information which they want to share with only close ones.
3. Information which they do not want to share with anyone.
Now different people may keep different information in different category. For example for a person A, information about his/her girl friend may be in category one but for some other person same info can be in some other category. It depends on the overall nature of the person. What might be the reason for a person to put something in a category and at the same time for any other person to put same thing in some other category. According to me this depends on the way an individual has been brought up. There may be several factors affecting this such as environment in which a person lives, his/her family background, family financial situation, social values etc.
There is another aspect of revealing info to others which is how i share info with others as described in the starting. Why is a person ready to share some info with someone but not with others. According to me the reason for this is that people have some fear in their mind or they are very possessive about something and that fear or possessiveness refrains them to share some info with everyone. For example, if i meet a strange person and i know that i am never going to meet that person again and if he/she asks me about something personal then i may not reveal actual info with him/her. Why did i not reveal exact info to that person even if i am not going to meet him/her again. This is because of the fear or possessiveness which i had. So everyone has some or other fear and everyone is possessive to some extent.
So if we classify personal information of an individual then there will be three categories.
1. Information which they do not mind sharing with anyone.
2. Information which they want to share with only close ones.
3. Information which they do not want to share with anyone.
Now different people may keep different information in different category. For example for a person A, information about his/her girl friend may be in category one but for some other person same info can be in some other category. It depends on the overall nature of the person. What might be the reason for a person to put something in a category and at the same time for any other person to put same thing in some other category. According to me this depends on the way an individual has been brought up. There may be several factors affecting this such as environment in which a person lives, his/her family background, family financial situation, social values etc.
There is another aspect of revealing info to others which is how i share info with others as described in the starting. Why is a person ready to share some info with someone but not with others. According to me the reason for this is that people have some fear in their mind or they are very possessive about something and that fear or possessiveness refrains them to share some info with everyone. For example, if i meet a strange person and i know that i am never going to meet that person again and if he/she asks me about something personal then i may not reveal actual info with him/her. Why did i not reveal exact info to that person even if i am not going to meet him/her again. This is because of the fear or possessiveness which i had. So everyone has some or other fear and everyone is possessive to some extent.
American capitalism and current financial markets
America declares that it is a capitalist country. But after looking at recent developments in financial markets and America's response to them, can we really say that it is ? This question mark should have been bigger than i have put it. Let's first discuss which financial changes i am talking about.
Recently there have been financial turmoil all over the world. It started around one month back. Almost every country seems to struggling with this crisis. Every stock market is falling like anything. Most of the banks are trying to inject liquidity in the system by lowering their key rates. All those indications show that world economy is in crysis.
We should in fact have realized this situation before some time. I was watching one interview two months back. Interviewer was Namrata Barar who is equity correspondent in NDTV and person was Shankar Sharma. At that time no body could expect that sensax will fall to 10,000 levels. But Shankar Sharma said that sensax will go up to 10,000 levels in that interview. At that time market was hovering around 15000 levels. I though that what the hell is problem with this guy. I never expected that indian market will fall that much. But if we now see, we find that he was right. So from where it started. It started from bankruptcy of Lehman brothers. After that many more financial institutions came and showed that financial markets are indeed in crisis and it is expected that in next one year almost one thousand banks will file for bankruptcy all over the world. Even now people say that stock markets have fallen significantly but who knows if they are indeed. If we look at facts of great depression then we find that during that time American markets, which are considered as one of the strongest and stable market, fell more than 90 percent.
Now i will come to my original point about American capitalism. According to capitalism, companies have full freedom to do anything they want. If they do good they will grow if they do not then they will be in crisis. Recent changes in financial systems have put American financial institutions in great trouble. Markets do not have enough liquidity. Credit crisis is also there. American government came up with a 700 billion bailout plan to overcome this situation. Now if american government assumes that if an institution is not able not survive then it should not continue. Then why did govt made plan for bailout and buy bad assets of the financial institutions ?
Leaving this blog at this point will continue this in next part.
Recently there have been financial turmoil all over the world. It started around one month back. Almost every country seems to struggling with this crisis. Every stock market is falling like anything. Most of the banks are trying to inject liquidity in the system by lowering their key rates. All those indications show that world economy is in crysis.
We should in fact have realized this situation before some time. I was watching one interview two months back. Interviewer was Namrata Barar who is equity correspondent in NDTV and person was Shankar Sharma. At that time no body could expect that sensax will fall to 10,000 levels. But Shankar Sharma said that sensax will go up to 10,000 levels in that interview. At that time market was hovering around 15000 levels. I though that what the hell is problem with this guy. I never expected that indian market will fall that much. But if we now see, we find that he was right. So from where it started. It started from bankruptcy of Lehman brothers. After that many more financial institutions came and showed that financial markets are indeed in crisis and it is expected that in next one year almost one thousand banks will file for bankruptcy all over the world. Even now people say that stock markets have fallen significantly but who knows if they are indeed. If we look at facts of great depression then we find that during that time American markets, which are considered as one of the strongest and stable market, fell more than 90 percent.
Now i will come to my original point about American capitalism. According to capitalism, companies have full freedom to do anything they want. If they do good they will grow if they do not then they will be in crisis. Recent changes in financial systems have put American financial institutions in great trouble. Markets do not have enough liquidity. Credit crisis is also there. American government came up with a 700 billion bailout plan to overcome this situation. Now if american government assumes that if an institution is not able not survive then it should not continue. Then why did govt made plan for bailout and buy bad assets of the financial institutions ?
Leaving this blog at this point will continue this in next part.
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