A very interesting video by Hans Rosling on how the worlds 200 countries have moved over the last 200 years to higher prosperity and life expectancy. The only issue is that many in the middle are averages, as he points out about china, and its really a straight line if you do finer subdivisions and the whole world will take another couple of centuries to reach the highs enjoyed by the western world today by which time the western world would have moved far far ahead.
I think the promise can only be delivered by technology. If technology can help bring down cost of medication and improve productivity of farms in the world, that will bring everyone up to almost the same level of health and on the basis of essential commodities PPP, also of wealth. My bet is on Technology as the great equalizer.
Saturday, December 25, 2010
Saturday, December 11, 2010
Money Supply - The Perpetual Problem
It is interesting, this contrast between monetary policy in the west and in the East(Chindia). Probably a very good time for everyone to learn about the fine balance that the Central Bankers need to manage while walking in the dark. And its not like this job became difficult in the last few years, it has been as difficult for centuries.
I've been reading some Roman history, and recently found an interesting passage in Will Durant's classic "Caesar and Christ: A History of Roman Civilization and Christianity from the beginnings to A.D. 325".
I've been reading some Roman history, and recently found an interesting passage in Will Durant's classic "Caesar and Christ: A History of Roman Civilization and Christianity from the beginnings to A.D. 325".
The famous “panic” of A.D. 33 illustrates the development and complex interdependence of banks and commerce in the Empire. Augustus had coined and spent money lavishly, on the theory that its increased circulation, low interest rates, and rising prices would stimulate business. They did; but as the process could not go on forever, a reaction set in as early as 10 B.C., when this flush minting ceased. Tiberius rebounded to the opposite theory that the most economical economy is the best. He severely limited the governmental expenditures, sharply restricted new issues of currency, and hoarded 2,700,000,000 sesterces in the Treasury.
The resulting dearth of circulating medium was made worse by the drain of money eastward in exchange for luxuries. Prices fell, interest rates rose, creditors foreclosed on debtors, debtors sued usurers, and money-lending almost ceased. The Senate tried to check the export of capital by requiring a high percentage of every senator’s fortune to be invested in Italian land; senators thereupon called in loans and foreclosed mortgages to raise cash, and the crisis rose. When the senator Publius Spinther notified the bank of Balbus and Ollius that he must withdraw 30,000,000 sesterces to comply with the new law, the firm announced its bankruptcy.
At the same time the failure of an Alexandrian firm, Seuthes and Son due to their loss of three ships laden with costly spices and the collapse of the great dyeing concern of Malchus at Tyre, led to rumors that the Roman banking house of Maximus and Vibo would be broken by their extensive loans to these firms. When its depositors began a “run” on this bank it shut its doors, and later on that day a larger bank, of the Brothers Pettius, also suspended payment. Almost simultaneously came news that great banking establishments had failed in Lyons, Carthage, Corinth, and Byzantium. One after another the banks of Rome closed. Money could be borrowed only at rates far above the legal limit. Tiberius finally met the crisis by suspending the land-investment act and distributing 100,000,000 sesterces to the banks, to be lent without interest for three years on the security of realty. Private lenders were thereby constrained to lower their interest rates, money came out of hiding, and confidence slowly returned.
Sunday, November 28, 2010
Ownership Structure and cost of Debt Capital
There have been many studies in the past which have focused on the impact of ownership structure and corporate governance on the cost of capital, both equity as well as debt.
Another paper by Harvard professors have again come to similar conclusions after looking at the data in East Asian and Western European countries during the period from 1996 to 2008. Hopefully the owners will start to realize the economic costs born by their companies due to the ownership structure, corporate governance & transparency issues and proactively and diligently work towards avoiding them.
Another paper by Harvard professors have again come to similar conclusions after looking at the data in East Asian and Western European countries during the period from 1996 to 2008. Hopefully the owners will start to realize the economic costs born by their companies due to the ownership structure, corporate governance & transparency issues and proactively and diligently work towards avoiding them.
Much more than systematically important
The size of MFI business in India is some 30,000 cr, that's one STFC/LICHF. Big, but by no means too big to impact the system. In the context of the financial market today, this is literally small change. Of this some 10,000 cr is in Andhra which was almost dead, so one can understand why form a financial market integrity perspective the RBI is not concerned and hence deafeningly silent on the issue. But the MFI business is much more than a business, there was a reason why Andhra started using the SHG model to lend out money at 3% pa in the first place.
According to the Oxford Poverty and Human Development Initiative, more people live in poverty in eight Indian states than in 26 of sub-Saharan Africa’s poorest countries. While incomes are rising in India, human development indicators measuring health and nutrition are not to the same degree and remain some of the world’s worst. India has the world’s largest population of poor people. The solution for coming out of poverty is the same which everyone from them to Mukesh Ambani uses, which is save/borrow, invest for productive purposes which generates a surplus after paying all the economic charges and repeat the cycle. While the MFI industry did not go beyond loans, they did reach a surprisingly large number with loans. The people who they reached are the ones who were paying super high rates to moneylenders and in some cases absolutely unable to borrow, these guys have been given a hope by the industry and this fact should not be forgotten under the influence of SKS's IPO.
This industry did a lot of things that the government after 60 years could not. The benefits of this industry must be looked at holistically and not only from a financial market and profitability perspective.
According to the Oxford Poverty and Human Development Initiative, more people live in poverty in eight Indian states than in 26 of sub-Saharan Africa’s poorest countries. While incomes are rising in India, human development indicators measuring health and nutrition are not to the same degree and remain some of the world’s worst. India has the world’s largest population of poor people. The solution for coming out of poverty is the same which everyone from them to Mukesh Ambani uses, which is save/borrow, invest for productive purposes which generates a surplus after paying all the economic charges and repeat the cycle. While the MFI industry did not go beyond loans, they did reach a surprisingly large number with loans. The people who they reached are the ones who were paying super high rates to moneylenders and in some cases absolutely unable to borrow, these guys have been given a hope by the industry and this fact should not be forgotten under the influence of SKS's IPO.
This industry did a lot of things that the government after 60 years could not. The benefits of this industry must be looked at holistically and not only from a financial market and profitability perspective.
Monday, November 8, 2010
Am I right or am I right?
Not to blow my own trumpet, but my prediction of Gold over 1300 given in November 2009 has happened and Gold has stayed above $1300 for quite some time now. I still believe QE2 will take Gold, Silver, Oil and all other commodities along with real estate even higher. Big mistake to not be invested in these.
Saturday, November 6, 2010
Indian Banks grappling with online frauds.,
Of late, I have heard about a number of cases of online frauds in India. I would attribute this trend to two primary reasons. One, the widespread acceptance of online banking in India and two, the growth of higher income bracket salary class in India. The fact that it is the latter which has the highest acceptance of online and phone banking as a way of life is adding fuel to the fire. Regular readers will recall the reported sophistication that online fraudsters have attained in their trade.
Recently I came across a case involving Axis, here are a few clips (click to expand)
To an unsuspecting non-net savvy account holder (you won't believe the number out there) this will look like a genuine mail from the bank. Even the email id is very convincing.
Now if you click on "view", this is what you see (I didn't download it)
I am assuming after you have given all your details, the downloaded file will connect to some server out of Russia or something, the info will be stolen and your credit card, bank account etc all will be swiped clean.
I obviously was not going to sit quietly and let this happen, so I contacted Advocate Purvi Shah to help me take these guys to task. What she revealed was a shocking state of affairs for banks online services. She has dealt with many similar cases, the list of banks being targeted seemed endless. There was a copy of Axis bank site, ICICI bank site, SBI site, Income tax departments site and what not. She showed me a live example where the mail claimed to be from the Income Tax department about an incometax refund, the amount mentioned was some 3,500 rupees to make it sound convincing. Once you open the mail, it asked you to click on a link to claim the refund, this action took you to a website which was an exact replica of the Income tax department's website and asked you to fill in your bank account details for any of the banks listed. I was shocked to see the list. It had some 7 banks listed including biggest PSU and Private sector banks and each had a connected site which was an exact replica of the actual bank's website. With such an elaborate scheme, it is very likely that many people are getting defrauded every day.
I asked her what can citizens about this? the answer is not much besides may be reporting to the police and this being most likely an international operation, it is very difficult for even the police to catch such criminals. For the Income Tax department website case mentioned earlier, she has taken the case up with Mumbai police's cyber crime branch on her own, however she thinks there are many cases which do not get reported by internet savvy customers who, after realizing it to be a fraud, will simply close the browser instead of reporting the case to proper authorities. At least there is some hope if authorities keep getting information as soon as possible about such sites.
While this was one aspect of online frauds, in our conversation she revealed many cases where the information was never stolen online. It was in the offline world that the actual fraud occurred, online gateways were only the means of transferring money from your account to other accounts. And if you are a bank customer with an active online banking facility, you are basically on a weak wicket if money is stolen using correct passwords. She revealed cases where allegedly the passwords etc were provided by close associates of the customer or bank employees who were hand in glove with the criminals.
These cases raise many questions about risk management framework, especially operational risk pillar that the BASEL committees have been emphasizing so much on, in Indian banks. Particularly the gravity of the risk of employees defrauding the customer needs to be appreciated by top managements as it brings with it reputational risks. While banks are trying to balance the need for security with convenience of use for the customer, the growing number of cases should make them more vigilant for the sake of their customer as well as their own. The fact remains that irrespective of what information the criminals posses, they need to go through the real websites/POS machines to get the money out of your bank account/Credit Cards and the banks must work out solutions to stop them. The first step for this are dynamic passwords and issuing only photo cards along with active mitigation, intelligence and counter attack strategies. That these websites are still in existence is a failure not only of the police department but of the risk control and mitigation departments of the banks themselves. (ever heard of DDoS attack?)
We are lucky to have a very sensible regulator in RBI and am sure in some time the banks hand will be forced. Lets just hope banks don't wait for that long and act now to save their customers the harassment and suffering.
If you come across something like this, please report it to either the cyber crime branch of your local police or if you are not sure what to do, get in touch with Purvi for guidance.
Recently I came across a case involving Axis, here are a few clips (click to expand)
To an unsuspecting non-net savvy account holder (you won't believe the number out there) this will look like a genuine mail from the bank. Even the email id is very convincing.
Now if you click on "view", this is what you see (I didn't download it)
I am assuming after you have given all your details, the downloaded file will connect to some server out of Russia or something, the info will be stolen and your credit card, bank account etc all will be swiped clean.
I obviously was not going to sit quietly and let this happen, so I contacted Advocate Purvi Shah to help me take these guys to task. What she revealed was a shocking state of affairs for banks online services. She has dealt with many similar cases, the list of banks being targeted seemed endless. There was a copy of Axis bank site, ICICI bank site, SBI site, Income tax departments site and what not. She showed me a live example where the mail claimed to be from the Income Tax department about an incometax refund, the amount mentioned was some 3,500 rupees to make it sound convincing. Once you open the mail, it asked you to click on a link to claim the refund, this action took you to a website which was an exact replica of the Income tax department's website and asked you to fill in your bank account details for any of the banks listed. I was shocked to see the list. It had some 7 banks listed including biggest PSU and Private sector banks and each had a connected site which was an exact replica of the actual bank's website. With such an elaborate scheme, it is very likely that many people are getting defrauded every day.
I asked her what can citizens about this? the answer is not much besides may be reporting to the police and this being most likely an international operation, it is very difficult for even the police to catch such criminals. For the Income Tax department website case mentioned earlier, she has taken the case up with Mumbai police's cyber crime branch on her own, however she thinks there are many cases which do not get reported by internet savvy customers who, after realizing it to be a fraud, will simply close the browser instead of reporting the case to proper authorities. At least there is some hope if authorities keep getting information as soon as possible about such sites.
While this was one aspect of online frauds, in our conversation she revealed many cases where the information was never stolen online. It was in the offline world that the actual fraud occurred, online gateways were only the means of transferring money from your account to other accounts. And if you are a bank customer with an active online banking facility, you are basically on a weak wicket if money is stolen using correct passwords. She revealed cases where allegedly the passwords etc were provided by close associates of the customer or bank employees who were hand in glove with the criminals.
These cases raise many questions about risk management framework, especially operational risk pillar that the BASEL committees have been emphasizing so much on, in Indian banks. Particularly the gravity of the risk of employees defrauding the customer needs to be appreciated by top managements as it brings with it reputational risks. While banks are trying to balance the need for security with convenience of use for the customer, the growing number of cases should make them more vigilant for the sake of their customer as well as their own. The fact remains that irrespective of what information the criminals posses, they need to go through the real websites/POS machines to get the money out of your bank account/Credit Cards and the banks must work out solutions to stop them. The first step for this are dynamic passwords and issuing only photo cards along with active mitigation, intelligence and counter attack strategies. That these websites are still in existence is a failure not only of the police department but of the risk control and mitigation departments of the banks themselves. (ever heard of DDoS attack?)
We are lucky to have a very sensible regulator in RBI and am sure in some time the banks hand will be forced. Lets just hope banks don't wait for that long and act now to save their customers the harassment and suffering.
If you come across something like this, please report it to either the cyber crime branch of your local police or if you are not sure what to do, get in touch with Purvi for guidance.
Sunday, August 15, 2010
CFAI showing the iron fist?
I always wondered how an organization with so much money and global muscle can face challenges of such proportions in India? especially if it is their fastest growing market? I now think it was either because they were trying to resolve the issues using the velvet glove but were now forced to show the iron fist....or maybe because they only recently started to care about this market.
Anyway Just FYI, in Jan 2010 CFAI has tied up with Securities and Exchange Board of India (Sebi) to facilitate the employees of the market regulator to join the CFA Program.
Under the agreement, the institute will encourage Sebi employees to register for the Level I exam of the CFA Program, considered to be most rigorous, a release said.
CFA Institute President and CEO John Rogers and Sebi Chairman C B Bhave have signed an agreement to this effect.
As you know in August 2006, ICFAI was ordered by the Delhi High Court (an interim injunction) to cease using the CFA and other trademarks of CFA and in September 2009 in a surprising (Ahem!) twist of events ICFAI, Hyderabad was asked to pay $ 1 million to CFAI,USA in damages for using the CFA trademark in the US.
Good decisions, good and big market..
Anyway Just FYI, in Jan 2010 CFAI has tied up with Securities and Exchange Board of India (Sebi) to facilitate the employees of the market regulator to join the CFA Program.
Under the agreement, the institute will encourage Sebi employees to register for the Level I exam of the CFA Program, considered to be most rigorous, a release said.
CFA Institute President and CEO John Rogers and Sebi Chairman C B Bhave have signed an agreement to this effect.
As you know in August 2006, ICFAI was ordered by the Delhi High Court (an interim injunction) to cease using the CFA and other trademarks of CFA and in September 2009 in a surprising (Ahem!) twist of events ICFAI, Hyderabad was asked to pay $ 1 million to CFAI,USA in damages for using the CFA trademark in the US.
Good decisions, good and big market..
Tuesday, April 20, 2010
Indian Financial Markets Getting Exciting!!
For all those who were longing for a chance to play with the many Fixed Income products available in the global markets but hitherto unavailable in the Indian markets, RBI has come out with a lot of good news today.
Highlights of the Financial Markets Proposals by RBI (From Reuters):
* To start interest rate futures on 5-year and 2-year securities as well as 91-day T-bills
* Final guidelines norms on below one-yr NCD issuance by end-June
* Draft report on plain-vanilla over-the-counter credit default swaps for corporate bonds by end-July
* Final guidelines on over-the-counter forex derivatives by end-June
* Plain vanilla currency options on spot dollar-rupee exchange rate to be allowed on stock exchanges
* Banks to be allowed to classify investments in non-SLR bonds issued by infrastructure companies, with minimum 7 years maturity in held-to-maturity category
FINANCIAL MARKET INFRASTRUCTURE
* To introduce reporting platform for secondary market dealers in CDs and CPs.
* To set up working group to work out single point reporting system for all over-the-counter rate and forex derivative deals.
FOREIGN BANKS AND NEW BANKS
* Discussion paper on the mode of presence of foreign banks in India through branch or wholly-owned subsidiary model to be prepared by September 2010
* Discussion paper on licensing new banks by end-July
Looking forward to a busy and Exciting FY11.
Highlights of the Financial Markets Proposals by RBI (From Reuters):
* To start interest rate futures on 5-year and 2-year securities as well as 91-day T-bills
* Final guidelines norms on below one-yr NCD issuance by end-June
* Draft report on plain-vanilla over-the-counter credit default swaps for corporate bonds by end-July
* Final guidelines on over-the-counter forex derivatives by end-June
* Plain vanilla currency options on spot dollar-rupee exchange rate to be allowed on stock exchanges
* Banks to be allowed to classify investments in non-SLR bonds issued by infrastructure companies, with minimum 7 years maturity in held-to-maturity category
FINANCIAL MARKET INFRASTRUCTURE
* To introduce reporting platform for secondary market dealers in CDs and CPs.
* To set up working group to work out single point reporting system for all over-the-counter rate and forex derivative deals.
FOREIGN BANKS AND NEW BANKS
* Discussion paper on the mode of presence of foreign banks in India through branch or wholly-owned subsidiary model to be prepared by September 2010
* Discussion paper on licensing new banks by end-July
Looking forward to a busy and Exciting FY11.
Monday, February 22, 2010
Purvi Shah Advocate
I know she is good at her work, and does a lot of pro-bono work too.
Anyone looking for legal advice should talk to her,
her site is www.shahlaw.wordpress.com
Anyone looking for legal advice should talk to her,
her site is www.shahlaw.wordpress.com
Contact:
Purvi Shah Advocate
304/B Suman Apts,
Orlem Tank Road, Malad West
Mumbai – 400 064
India
Tel: +91 022 28645304
Mob: +91 9324181200
UK Tel: 0871 284 4838
Thursday, January 21, 2010
My Marathon Timing and Photo's
This is fantastic. I didnt know they put details and photo's for all participants
http://www.marathon-photos.com/scripts/event_entry.py?event=Sports/CPUK/2010/Mumbai%20Marathon&match=18980
http://www.marathon-photos.com/scripts/event_entry.py?event=Sports/CPUK/2010/Mumbai%20Marathon&match=18980
Tuesday, January 12, 2010
Bye Bye Xforex..hello Forextrader
You already know my opinion on the trading platform of Xforex, but Friday when the market volatility was expected to be on the higher side, they just hut down the platform for supposed maintenance, I am not aware of any organization that would shut the systems on a Friday for maintenance, its always Saturday or Sunday.
Account Stmt:
Anyway, not that I was going to trade, was not well for the past few days, but I just cannot work with a company like this. So I have moved to Forextrader platform from Forex.com.
Account Stmt:
Friday, January 8, 2010
For a good cause
As you may be aware, I am running the Mumbai Marathon for a cause that I am supporting -- eradication of Cancer. I hope to raise a pledge from you to help my chosen NGO ‘Cancer Patients Aid Association (CPAA). ‘United Way of Mumbai’ is the Charity Partner for Standard Chartered Mumbai Marathon and all money I collect would be routed through
- By Cash:Please give your donation amount to me. I shall fill out the donation details in the pledge sheet and hand over the money to
- By Credit Card: Please visit http://www.unitedwaymumbai.org/index.php?option=com_content&view=article&id=146&popup=1&template_id=162 and make a payment using your credit card and you will receive the receipt directly.
Thursday, January 7, 2010
Seem to be touching the pre announcement target,
GBP right now at USD 1.5900, I moved out early since I was expecting the market to fall by 4:30-45 but it didn't so I moved out..it is possible that we may touch my original targets before the announcement. 10 mins to go before the meeting
EUR in focus
preparing for a lively session tomorrow as we will have Eurozone 3Q GDP and Unemployment numbers coming out. not expecting major changes but I think the market will take a cue from BOE announcement today...lets see.
16500 profit on the pre BOE nervousness trade
closed just now before the BOE announcements start to tick in.....made a good USD 16,500 profit. i.e 33% of initial equity....i.e. currently am up 68% in 3 days.....i.e. up 168% in 35 days.
I saw GBP weak yesterday because of the upcoming BOE rate decision, while it is widely expected to be a non-event nonetheless one will expect some market nervousness. hence I went short 5 GBP at 5968 (I agree that was too early but I thought lets scalp) and then again 1 GBP at 5984. but the market suddenly moved against me and went all the way up to 6050 and as you would be aware, leverage eats up equity at a pace so fast at this size of a position that I decided against sticking to my target of 5940, and put my take profit at 5960. which ofcourse was hit and I am now at 67400 i.e. around 35% up in 2 days :)
(if you consider my moneyed adventures, I am 135% up in just 35 days)
Account stmt
(if you consider my moneyed adventures, I am 135% up in just 35 days)
Account stmt
Wednesday, January 6, 2010
Started Paper trading already
As you might know...I have switched to paper trading as of now, I decided to move to a different player with a demo account that will allow me to paper trade effectively without eating up loads of bandwith which used to happen with my trading platform.
So I picked Xforex. its a lousy trading platform and does not allow scalping, which take away lot of the fun part, but is ok for my use and hence I am sticking with it...I had gone Short 5 EUR at 4432 and closed at 4410 and made a handsome 11,000 USD
PS: this system allows me 200 times leverage on a 50,000 notional deposit. so I can become a real player :)
Balance up to 61,000 - i.e. up 22% on day one..man I am on fire :) ofcourse this is demo account leverage effect .
So I picked Xforex. its a lousy trading platform and does not allow scalping, which take away lot of the fun part, but is ok for my use and hence I am sticking with it...I had gone Short 5 EUR at 4432 and closed at 4410 and made a handsome 11,000 USD
PS: this system allows me 200 times leverage on a 50,000 notional deposit. so I can become a real player :)
Balance up to 61,000 - i.e. up 22% on day one..man I am on fire :) ofcourse this is demo account leverage effect .
Tuesday, January 5, 2010
Closed at 4315 and Quit
Sorry for the absence for the past few days, but it was due to other reasons not to be disclosed. I had closed the position at 4315 and made a decent profit on the last trade instead of making a humongous profit on that one....Oh I wish I had closed at 4220. nonetheless I needed the money so I have quit. made just a little above 100% in one month...not bad, I dont think I am fooling myself into believing I could have continued at this rate, but I am happy :)
Now I am paper trading on this other website just for fun....started out today and currently long EUR at 4407. This one is a 3 pips spread model, and given I am pape r trading..I will actually be trading in million lots :)
Now I am paper trading on this other website just for fun....started out today and currently long EUR at 4407. This one is a 3 pips spread model, and given I am pape r trading..I will actually be trading in million lots :)
Subscribe to:
Posts (Atom)