Barbad Katte

Have we lost a sense of propotion ?

noreply@blogger.com (RameshJ) — Tue, 04 Aug 2009 06:02:00 +0000

Here is a snip picked from Economic Times

We seem to creating a ruckus about 27 Cr that Mayawati is planning to waste & nothing about the 10,000+ Crores that the Delhi Govt is planning to waste?

Capital expenditure vs Total expenditure

noreply@blogger.com (RameshJ) — Wed, 15 Jul 2009 10:48:00 +0000

If the 6.8% Fiscal deficit was not bad news enough, here is something more to be worried about.An analysis of the Plan-Capital Expenditure from the 1995-1996 budget to the 2009-2010 budget shows that the government is spending a smaller percentage of its total spending on creating new "infrastructure" ( Capex in the Plan). The capital expenditure portion of the planned expenditure has dropped from about 10% in the pre 2004 period to about 4.5% now ( Yellow line) . And we are blaming the world economy for India's slowdown ?
And look at the hockey stick in blue ( Total expenditure). Insolvency in the offing ?

Here is the table

Year	Plan - Capital Expenditure	Total Expenditure	Plan Capex as % of Total
1995-1996	18262	183004	9.98%
1996-1997	22530	202298	11.14%
1997-1998	24510	235245	10.42%
1998-1999	26923	281912	9.55%
1999-2000	31264	303738	10.29%
2000-2001	33134	335523	9.88%
2001-2002	37320	364436	10.24%
2002-2003	41420	404013	10.25%
2003-2004	43421	474255	9.16%
2004-2005	47714	505791	9.43%
2005-2006	29638	508705	5.83%
2006-2007	28146	581637	4.84%
2007-2008	31913	709373	4.50%
2008-2009	41301	900953	4.58%
2009-2010	46751	1020838	4.58%

Capital preservation mode

noreply@blogger.com (RameshJ) — Wed, 22 Oct 2008 06:27:00 +0000

Most of my friends know that I have been in a capital preservation mode for quite some time now. There is nothing that I would like better than to able to preserve the purchasing power of my capital for the next couple of years. (i.e a 0% real return would be considered a crowning achievement )

I do not have an answer to the questions that I had way back in December 2007. But the scenario that I had expected seems to be unfolding. The Fed is fighting to inflate and at some point it should succeed ( i.e arrest fall in nominal prices). Whether the US goes the Wiemar way or manages a 1970s rerun is still a matter of great debate.

Given this scenario & its impact on India, my inclination has been to hedge with investments in diversified asset classes with the hope that the losses in one can be offset by gains in another. Just to give you a feel of how confused I am, here is a break up of my portfolio over the past year. (And yeah I took my advice given on this blog in Dec 2007 and only have money that I can afford to lose on the stock market.)

Oct 2007
85% Stocks
5% ETF Gold
10% Cash

Dec 2007
75% Stocks
18% Liquid Funds
5% ETF Gold
2% Cash

March 2008
35% Stocks
40% Liquid funds
5% ETF gold
20% Cash

Oct 2008
20% Stocks
7% Short term Gilts
33% FD in public sector banks
5% FMP
15% Gold ( both physical & ETF)
17% Cash in public sector banks
3% Cash in other banks

Should we prepare for a 70s rerun ?

noreply@blogger.com (RameshJ) — Tue, 19 Aug 2008 09:45:00 +0000

The present government has successfully moved India back to the nineties.

The era of shortages is back ( diesel/power/LPG)
Rupee is nosediving
Fiscal deficit is alarming
Inflation is back in double digits & continues to remain there
Kashmir is back in the political centre stage

Would the next government takes us back to the seventies ? By that I mean

Will our taxes sky rocket ?( Marginal Tax rate was as high as 97.5% in 1971 !)
Will ULCA, FERA and other such acts make a comeback ?
Will banks be nationalized once more ?
Will Gold controls be reimposed ( I know it is a late 60s act rather than a 70s one )
Will possessing 1000 rupee notes become illegal again ?

Whether we move back to the seventies or bounce back to the noughties would depend on who comes to power. My guess would be

A Congress/Left would push us back to the seventies,
A Congress/Riff Raff would slowly move us in the direction of the noughties
A Congress majority would put us clearly in the noughties
A BJP/Riff Raff combo would also move us in the noughties direction
A BJP majority would put us clearly in the noughties
A Riff Raff with outside support from either the Congress/BJP would leave us in status quo ( i.e stuck firmly in the nineties)
A Riff Raff/Left combo could even take us back to the seventies in double quick time

Just my opinion. As usual feel free to disagree.

Taming Inflation

noreply@blogger.com (RameshJ) — Wed, 25 Jun 2008 04:32:00 +0000

India's inflation numbers last week stood at 11.05% and will most likely go up when next week's numbers are out ( Base effect + The effect of the oil price hike flowing through the system ). The government is reaching out into its 1950s & 1970s idea cupboard for solutions to fight the inflation.

The government would do well instead to think of solutions that are more appropriate for India in 2008. The two big difference between 1970 & now is
1) The public sector no longer is the dominant force in the industrial land scape.
2) The middle class has grown in size. It has a rosier outlook to the future & has mortgaged parts of future earnings to improve its current life style.

A 1970s response of price caps & increased interest rates is just going to result in shortages on one hand & an angry middle class on the other hand. A better response would be to cut the exorbitant indirect taxes that the government charges. The steps that the government should take are

1) Slash Cenvat rates for excise to 12% from the current rates of 14%/
2) Slash service tax to 12% from the current 12.5%
3) Remove the cess on excise & service taxes
4) Move petrol & diesel to "declared goods" list , and let the oil companies price it at market driven prices

With these measures the inflation worry will disappear and will be replaced by the "Where will we find the money for all our pet schemes" worry. The excise cut impact will most likely be offset by rising production and the already risen prices ( i.e these measures will stop the further rise of prices, but are unlikely to roll them back, so excise duty would any way be higher than what the government had budgeted).
For the tax losses to the state government on petrol & diesel, the central government could hand over the oil bonds that it has been paying the oil companies.

Will the centre follow this approach ? From the RBI action yesterday ( raising CRR & Repo rates by 0.5%) it looks like the Government continues to live in the past. Will RBI at least be sensible this time by letting the Rupee appreciate against the Dollar( or better still force the rupee appreciation by dumping the enormous quantities of fast depreciating US Dollars that it owns ?) . We will have to wait and see.

Will things change?

noreply@blogger.com (RameshJ) — Mon, 23 Jun 2008 13:09:00 +0000

Pratap Bhanu Mehta has written a wonderful column today in Indian Express. Touching stuff.The worst part is that this could have been written 20 years ago, and it would still have reflected the reality then ( except the hopeful part, where he expects the expanding economy to provide opportunities, something no one could have told us when we were younger.)

With the cut-off marks for admissions rising, it is hard to know what genuine consolation to give to thousands of disappointed students. We can say to them: don’t interpret your inability to get into a college of your choice as your personal failure. It is our collective failure. Obdurate politicians, control-freak bureaucracies, insecure academics, ideas of social justice conceived in bad faith, the poverty of our imaginations, and our preference for control over freedom, levelling over distinction, have all conspired to ensure that you get very few choices. Consequently, that half an extra mark seems life-defining.

Call their bluff

noreply@blogger.com (RameshJ) — Thu, 05 Jun 2008 10:58:00 +0000

The Government has finally bitten the bullet & hiked fuel prices. As expected those that enjoy power without responsibility & those that think they have no responsibility are yelling for a roll back. The Government is finally now in a position to call their bluff.

The Government should wait for the agitation against the fuel price hike to reach a crescendo (which I expect it will in another couple of days) and then go ahead and declare diesel & petrol as "declared goods". This would mean that the exorbitant sales tax that state governments charge will be capped at 4%. This should bring down the fuel cost to below what prevailed before the hike.

For example in Hyderabad
Petrol price per litre before hike: Rs 51.1
Petrol price per litre after hike: Rs 56.65
Petrol price per litre if petrol is taxed at 4%: Rs 44.30

This allows the government the leeway to even let the oil companies set the price based on global prices, thus removing a huge headache for the government.

This move would lead to shortfall in the money available to the state governments. but that should not worry the Congress too much. The Congress does not have too many state governments, while those that are shedding crocodile tears on the behalf of the common man have a number of states under their belt. The opposition would find it difficult to protest this move as their wish to protect the common man would have been conceded (It is just that their governments will have to foot the bill instead of the centre!). Also the states having lower money to spend would increase Congress' chance of making a come back in these states.

One tight slap

noreply@blogger.com (RameshJ) — Wed, 28 May 2008 06:26:00 +0000

Here is a possible response to the Petroleum Minister's proposal to levy a cess on income tax payers in lieu of a hike in the price of fuel. Get hold of your neighbourhood Congress man and give him one tight slap. Sounds ridiculous ? But that is exactly what the minister is trying to do. He dare not pass the price increase to the consumers of fuel so he has decided to hit a soft target i.e the income tax payer. We the people cannot give the minister the one tight slap that he deserves so we hit another target. How different is that ?

Bangalore is still under represented

noreply@blogger.com (RameshJ) — Mon, 26 May 2008 08:01:00 +0000

Bangalore now sends 28 representatives to the Karnataka assembly ( Up from 16 after the recent delimitation exercise). Even after this massive increase in the number of MLAs it sends, Bangalore is still under represented by 8 to 9 MLAs. Imagine having 36-37 MLAs for Bangalore. The whole political landscape changes even more dramatically than what has happened in the 2008 elections

Here is the analysis based on the data supplied by the Election Commission

Average Number of Voters per constituency = 179336
Total Deviation for Greater Bangalore = 1552437
Under Representation = 1552437/179336 = 8.66

AC_NAME	TOTALELECTORS	Deviation
Yelahanka	241439	62103
K.R. Pura	308339	129003
Byatarayanapura	265952	86616
Yeshvanthapura	265174	85838
Rajarajeshwarinagar	301531	122195
Dasarahalli	291000	111664
Mahalakshmi Layout	218552	39216
Malleshwaram	194147	14811
Hebbal	100986	-78350
Pulakeshinagar	184980	5644
Sarvagnanagar	301976	122640
C.V. Raman Nagar	219663	40327
Shivajinagar	166829	-12507
Shanti Nagar	184138	4802
Gandhi Nagar	222144	42808
Rajaji Nagar	183301	3965
Govindraj Nagar	246476	67140
Vijay Nagar	253321	73985
Chamrajpet	214503	35167
Chickpet	207906	28570
Basavanagudi	226320	46984
Padmanaba Nagar	219637	40301
B.T.M. Layout	212808	33472
Jayanagar	189232	9896
Mahadevapura	275328	95992
Bommanahalli	261058	81722
Bangalore South	379115	199779
Anekal	237990	58654

Here is the data for all constituencies

Fund of Funds & Poll of Polls

noreply@blogger.com (RameshJ) — Fri, 23 May 2008 11:01:00 +0000

Long long ago unsophisticated investors were guided to invest in mutual funds. They were told that since they did not have either the expertise or the time to select individual stocks, they should leave it to a professional to manage their stock investment. In those days selecting a fund was easy. You had about 20-25 odd funds and you just had to pick a few of them to invest in and you were done. Then thousands of funds bloomed (OK I exaggerate , only hundreds of funds bloomed) and each had varying risks and return profile. Selecting which fund to invest in became a nightmare. The unsophisticated investor was then guided to a fund of funds ( i.e a mutual fund that would select the best funds to invest in, and these selected funds would in turn invest in individual stocks etc ).

The same seems to be playing out in the exit poll field. The exit polls for Karnataka has thrown up so many possibilities, that one probably needs a poll of these polls to decide which way the election results would go. I am sure some astute pollster will come up with this idea and hopefully exit polls can go back to being one number that is at least expected to be right in theory if not in practice.

Possible explanation for the mother of disconnects

noreply@blogger.com (RameshJ) — Mon, 12 May 2008 12:38:00 +0000

Anantha Nageswaran who writes the wonderful column Bare Talk in Mint had an article titled " The mother of disconnects". He was puzzled at the disconnect between US economic news and US stock markets. I have been puzzled too, but here is a possible explanation, that I can think, for the market behaving the way it is.

1) Most people have bought into the theory that one needs to invest in the stock market with a long term view. So bad news is not getting as many people to flee the markets as it would have a few years ago. So fewer sellers than expected.
2) The liquidity that the Fed is pumping into the system is going into the commodities & stock market, keeping both elevated.
3) In ordinary circumstance, this excess liquidity should have caused the dollar to nosedive. The presence of Central banks ( primarily PBoC) is keeping the dollar from depreciating quickly. Instead it is falling at a pace which China ( and possibly other countries ) are comfortable with and which will allow them to adjust without great social upheaval.
4) What else can one invest in ? Overvalued bonds ? Fast depreciating real estate ? Keep it as cash and watch raging inflation eat it ? Short the market & find that the market is irrational longer than you can be solvent ?

BTW people waiting for the "great crash" may be disappointed. It might be a slow grind down. Waiting with cash ( US dollar) is not going to help either ( Inflation !). Agri commodities seem to be in their own bubble. Investing in gold is fraught with danger ( Not much danger if the Fed continues its current " to heck with inflation" stance) as Fed can quickly change its stance ( Given a pliant media, it will also be sold as the very thing that will end the inflation and therefore is great for America). Oil is possibly the only asset class that may withstand any adverse Fed policy. If any of you know of any other way of preserving capital over the next couple of years,it would be wonderful if you me know about it.

Wake up call for the railways ?

noreply@blogger.com (RameshJ) — Wed, 23 Apr 2008 11:25:00 +0000

Here is a story that will set the alarm bells ringing in the Indian Railways

From The Telegraph

A consumer court has awarded Rs 50,000 as compensation to a man harassed by unauthorised passengers who barged into his reserved coach while he was travelling with his family.
The court held the Indian Railways guilty of deficiency in service and directed it to pay a litigation cost of Rs 5,000 in addition to the compensation to Sunil Kumar Gupta, who is Tihar Jail’s law officer.

Gupta said he, his wife Poonam and their two children were forced to stay awake during their overnight journey from Delhi to Jammu three years ago.

“Such a situation speaks volumes about the working of the railways as extraneous considerations on the part of officials allow unauthorised passengers to occupy reserved seats,” said New Delhi district consumer forum president K.K. Chopra. He held the railways liable for “deficiency in service, mental agony and harassment”.

The railways argued he should have approached the travelling ticket examiner (TTE) or pulled the chain. “It is the duty of the TTE to come to the compartment to... ensure that passengers who paid sleeper charges are provided berths,” the forum said.

If every passenger decides to sue the Indian Railways for this, often seen, deficiency in service, and the courts decide to award the same compensation, I expect to see the Indian Railways becoming insolvent in a matter of weeks if not months.

Time to move the placement calendar ?

noreply@blogger.com (RameshJ) — Thu, 06 Mar 2008 08:41:00 +0000

The placement season on most engineering campuses begin in the month of June. By September the majority of the batch is placed. These students are expected to join their jobs in the month of June the following year. This essentially translates to companies having to forecast their man power requirements 9 to 12 months ahead.
The 2001 US Technology slowdown prompted quite a few software companies to defer their job offers (or sometimes even rescind). The US recovery that year was quick, and life was back to normal. The 2008 job scene may be a lot different. I expect more companies to rescind (or defer for longer than 6 months).

For the current batch, nothing much can be done. For the future batches, I hope they move their placement calendar to Mar-Jun i.e. the tail end of the eighth semester. This should hopefully mitigate the problem of deferred/rescinded jobs. If the jobs scene is bad, at least the students will get an early heads up and can then invite more companies for placement.

Depression, Recession, Stagflation, Hyperinflation, Life as usual

noreply@blogger.com (RameshJ) — Thu, 27 Dec 2007 09:53:00 +0000

We are living in an interesting time. Depending on who you read, you can conclude that the US economy is going to experience

Depression
Recession
Soft landing. i.e cooling of the current growth. with no major problems. Life would be as usual
Stagflation
Hyperinflation

The proponents of each of these scenarios have convincing arguments. Surely some one is right and the rest are all wrong.

Here is my take on what will happen.
The Fed seems more comfortable fighting inflation than deflation. So they would rather err on the side of inflation. So scenario 4 or 5 is more likely. Ideally they would like to pull off a scenario 3, but given the extent of the losses in the banking and the shadow banking system, the over stretched consumer debt, the tottering real estate sector and very high trade deficit, Scenario 3 seems more of a hope. The Fed is more likely to let the dollar depreciate further ( By increasing money supply to ward of any deflation and cutting rates to stimulate growth ) . The resulting high inflation will probably need a Volcker like response down the line, but that would be a battle for another day.

Occurrence of Scenario 4 or 5 is going to depend on how much confidence the rest of the world has on the US dollar( A rapid fall of the US dollar can trigger hyperinflation), the extent to which the foreign holders of US dollars/ exporters to the US can break away from the impact of the fall of the US dollar, and how quickly the US economy will get back on its feet & start producing goods & services needed by the rest of the world.

What does this mean for an investor in India ? I do not know. Just make sure you only have that much money in the stock market that you can afford to lose.

Cassandra's predictions for 2008

noreply@blogger.com (RameshJ) — Tue, 18 Dec 2007 18:34:00 +0000

Cassandra's predictions for 2008. Good stuff.
Link via naked capitalism

Callous leaders -2

noreply@blogger.com (RameshJ) — Fri, 14 Dec 2007 12:37:00 +0000

From The Telegraph

“I told them I had been invited to come here and I should be given a chance to speak,” she told The Telegraph later. “The event is held each year to honour the men who saved Parliament, but no minister has the time to even speak to us. What is the point of calling us all this way, if they don’t even want to ask us how we are?”

She levelled a graver — but not unusual — charge. “There were ministers who were laughing during the function. How can they do that? This is about dignity.”

Is too much to expect that these folks will behave in a dignified manner? I thought the example on my blog was an one off. Apparently it isn't. And of course none of the national newspapers reported any one laughing.

From Times of India

Petroleum Minister Murli Deora was quoted as saying that the retail outlet allotted to Ganga Devi was commissioned on January 25, 2007. In the statement, Deora said that the "outlet is functioning smoothly...and the allottees has not approached BPCL (Bharat Petroleum Corporation Ltd) officials with any problem so far.''

Insisting that the government had given "top priority'' in providing relief to the families of the victims, Deora said out of nine cases, three retail outlets were commissioned in 2003, one in 2006 and four in 2007.

Why does it take the government 5+years to allot a petrol pump? BTW who among these nine "cases" has not yet been provided relief ? and why ?

Combating competitive tissue papering

noreply@blogger.com (RameshJ) — Wed, 05 Dec 2007 06:08:00 +0000

The RBI appears to have done a good job in limiting the amount of tissue paper denominated securities that it holds. The worry is that the other currency denominated securities that it holds may soon turn to tissue paper if the US can convince all the central banks to drop rates. What should RBI (or rather India ) do to hedge against this scenario ?

RBI can follow the follow the policy of competitive tissue papering ( Thanks Nitin). This would result in high inflation. A politically unacceptable solution for a government that always seems to be on the verge of an election.
Slow down the growth of forex reserves. It could choke the inflows or increase the outflows. Choking inflows through blunt weapons like Tobin Tax or curtailing investments comes with its own set of problems. Encouraging outflows seems to be a better option.

What can RBI do to encourage outflows without hurting the Indian industry too much.

RBI/GOI could encourage outflows on the capital account by removing the current investment caps for individuals & firms. There will not be any immediate impact for these moves ( I doubt if a large number of people are even investing to the current limit of 100,000 dollars ) but it will create some uncertainty in the minds of FIIs who are making a one way bet on the rupee.
Remove wealth tax on gold. Indian gold demand would go up & we would end up exchanging tissue papers for gold, which is not a bad bargain
Increase the strategic reserves of oil. India is doing that, may be it is time to accelerate the whole process.
Lower customs duties. Domestic industry seems to be doing well. It is probably a good time to usher in more competition

Added on Dec 6th 14:20 PM IST
Disclosure : I have some investments in gold through ETF & some oil company stocks

Where are the dollars ?

noreply@blogger.com (RameshJ) — Fri, 23 Nov 2007 12:21:00 +0000

The RBI has been furiously buying dollars to stem the rise of the rupee. It has bought over 84 Billion since Jan 2007. Where are these dollars going ?
From the historical data from US treasury India had about 15 Billion US dollars invested in US treasuries. The latest data shows that India is not even on the list. So it has less that 11 billion dollars of US treasuries.
So where are the dollars going ? Is RBI buying other countries treasuries and thus insulating itself from any weakening of the dollar ? If RBI is doing that, hats off to it. It is passing on the role of managing the dollar depreciation to other central banks, while keeping the rupee from appreciating.

Michael Lewis on "Why I'm Ready to Be New Citigroup CEO"

noreply@blogger.com (RameshJ) — Fri, 16 Nov 2007 08:09:00 +0000

Micheal Lewis column: "Why I'm Ready to Be New Citigroup CEO".
Fun stuff! Here is an excerpt.

The Wall Street CEO must possess an extraordinary ability to be paid huge sums of money each year without losing composure.
This isn't as easy as it sounds, especially when the firm is losing billions. Imagine if some board handed you $40 million or so a year (before benefits) and tossed in a nine-figure severance package. If you're like most people, you'd dance around the kitchen naked with the drapes wide open -- until you realized what people who raised you would say when they read about it in the paper.

AP tops the chart

noreply@blogger.com (RameshJ) — Wed, 14 Nov 2007 12:09:00 +0000

Andhra Pradesh has the distinction of topping the chart on the number of NGOs blacklisted by CAPART. Of course the data can be interpreted in many ways. May be the blacklisting criteria was tougher for AP, the AP based NGOs were stupid enough to get caught etc. The lesson to be learnt from this exercise is, if you plan to donate to NGOs, do your homework before giving away the money.

Here is the state wise list that I have compiled.

Andhra Pradesh	176
Bihar	123
Tamilnadu	75
Karnataka	71
Uttar Pradesh	69
Kerala	33
Rajasthan	33
Delhi	21
West Bengal	21
Haryana	20
Maharashtra	19
Orissa	19
Madhya Pradesh	14
Manipur	11
Nagaland	10
Gujarat	8
Jharkhand	8
Himachal Pradesh	6
J&K	4
Mizoram	4
Assam	2
Pondicherry	2
Chattisgarh	1
Meghalaya	1
Uttaranchal	1

Erosion of core constituency ?

noreply@blogger.com (RameshJ) — Tue, 06 Nov 2007 05:18:00 +0000

How much the CPI(M)/CPI's core constituency has been eroded can possibly be gauged from the JNU elections . Its student wing ( SFI-AISF) supported candidates finished 3rd in three of the four central panel posts and just about managed to cling on to second position in the other post. JNU has always considered a bastion for SFI, with both Prakash Karat & Sitaram Yechury being past presidents of the JNU students union. Does this election provide a pointer to the direction in which the wind is blowing ?

Mr Prime Minister, Did you sleep well last night ?

noreply@blogger.com (RameshJ) — Wed, 31 Oct 2007 07:54:00 +0000

Mr Prime Minster,
Did you sleep well last night ? If you did , was it because you stopped watching television? Was it because the Indian media chose not to highlight the plight of families of over 4000 workers detained in Dubai ? Was it because these 4000 odd people were not accused of terrorism and therefore did not deserve to have their share of your sleepless nights ? Was it because these poor workers had no articulate English speaking wives, to explain their viewpoint to media?

ps : Is it surprising to see that the BBC does not seem to report that any one was detained. It has a bland news item. What a contrast to its coverage of the Gurgaon Honda Strike

Callous leaders ?

noreply@blogger.com (RameshJ) — Tue, 28 Aug 2007 05:28:00 +0000

How callous can our leaders get ?

Here is an illustration. From Deccan Chronicle - epaper : Page 4

This comes a couple days after the bomb blast in Hyderabad. It was in a all party meeting to discuss the blast. Wonder if the Chief Minister & his colleagues would be laughing so loud if their friends/family had been victims?

Markets headed further down ?

noreply@blogger.com (RameshJ) — Thu, 09 Aug 2007 16:36:00 +0000

From Forbes : BNP Paribas Freezes Funds

One of Europe's largest banks, France's BNP Paribas, said on Thursday it had frozen three of its investment funds, citing volatility in the U.S. asset-backed securities market. The funds' exposure to risky subprime loans means the bank can no longer calculate their net value.

BNP Paribas blamed "the complete evaporation of liquidity" in certain areas of the U.S. securities market for its inability to calculate the fair value of the three funds in question

Hmm.. So any fund that has invested in these three funds will now no longer be able to accurately calculate their net value. So should they also be frozen ? That would trigger a cascading effect, which likely will result in no mutual fund any where in world being able to calculate their net value.

Here is the normal way in which this would have been handled. These funds would probably treat their entire sub prime mortgage investments as wiped out and calculate their net asset value accordingly. Investors would be allowed to redeem at this calculated net value. New investment in the funds would be stopped to allow existing investors to gain if there is any value left in the sub prime mortgage investment.

The fact that this wasn't done leaves room for speculation that losses from the sub prime part of the funds could have been unbounded i.e the entire net value of the funds could have been wiped off. A scary thought for markets already under some strain.

Disclosure : I have no short position in any markets.

Disclosure vs License permit raj

noreply@blogger.com (RameshJ) — Thu, 09 Aug 2007 06:00:00 +0000

Business Standard today has a wonderful editorial on higher education. This is the first time that I have heard of any one advocating a disclosure based approach to institutions of higher education.

The basic idea is straight forward. Instead of the mandarins of the HRD & its affiliates deciding who should offer, what courses, to whom and for what consideration, it is left to consumers of education to decide. To enable the consumer to make a rational choice, the editorial calls for disclosures from institutions that offer education. The idea has been borrowed from the Indian capital markets, which has moved from a restrictive Controller of Capital issues to a SEBI mandated disclosure rules for companies raising money in the capital markets. And the results are there to see.