When Inflation plays Runaway Bride

India's Inflation is a lot like Julia Robert's role in "Runaway Bride"(1999) ...and is catching global attention for refusing to be tied down despite several measures over the last 9 months or so. I happened to read Mike's latest post on Indian Inflation...it talks about how India's inflation has been driven up by food and fuel prices, how faster growth in Bank credit (the amount banks give away as loans to corporates and individuals) than in Bank deposits (the amount banks receive as deposits) has led to liquidity crunch, and how India (along with China) is going to "overheat and crash or their economic growth is going to slow dramatically, quite possibly both."

Before we move ahead on this, please note that Mike Shedlock (popularly known as Mish) is one of the world's best and arguably the most read blogger on global economy. So much so that he was even covered in NY Times recently as one of the ideas / trends for 2010. Check that link out, it talks about how post 2007  DIY (Do-It-Yourself) Macroeconomics - ordinary citizens as econo-bloggers have flourished on the internet, many with their own hypothesis and conclusions on how global data should be read and understood !

Having said that, I think while the analysis is correct, the conclusion being drawn here that India and China are overheating and will crash, is flawed...(and no, I'm not taking it personally !) Let's first start by understanding where we're coming from... Here's a chart of interest rates movements over the last couple of years...

Follow up - Developments on earlier posts

Thought I'd do a quick follow-up on the various posts posted earlier to gauge if the analysis and thought process was at least in the right direction...and also to make note of further developments on some of the topics covered. This post also introduces a video on this blog and a really interesting document, via embedded "Scribd". We'll also take a look at some other improvements that I've made to this blog. Hope you'll enjoy this read...

Banking on Global Scams

There is this interesting piece of journalism from NY Times. It talks about how a handful of banks are keeping the multi-trillion dollar derivatives trading to themselves, especially in Commodities markets.This is really interesting, and it exposes us to a world which is widely spread, but little is spoken and written about it...(and even lesser blogged!)... the world of commodities trading and hedging. Let me first start by explaining how and why Commodity companies use derivatives for hedging.

Dope 'em - Dec, Jan Effects of Markets

Just some of the similar events that took place simultaneously across the world:

• S&P 500 Index Climbs to Pre-Lehman Bankruptcy Level 
• Seoul shares hit 38-mth high as worry eases
• European shares hit 27-month high
• Nifty crosses 6k, Sensex crosses 20k after 5 weeks
• Nikkei hits 7-mth closing high on bargain hunting
• Copper and Cotton also moved up higher, Coffee jumped to a 13 year high (its definitely on caffeine !)

Apparently, the reasons for all these highs include:

• China backing the efforts put by Euro zone to contain the crisis (like there was an easier choice to make; besides, is China signaling a similar action being taken under similar circumstances is justified for them as well?)
• North Korea has backed away from threats to retaliate against the drill
• Mining companies rising on higher metal prices, (helping European shares edge higher)

Random Walk - The Paradigm Shift in Enterprise Solutions Sales

The Crisis that started with Lehman fall, really did change a lot of things on the ground...the way people looked at their businesses, the kinds of risks they were prepared to build in into their decisions, the casualness with which purchase decisions were made (all in the hope that this boom is going to go on forever), including even the sales presentations they gave and received! Yes, trust me, I have seen this difference although it took me some time figure out the shifts in patterns. However, whether this transition in sales presentations had started before the crisis and only got the final push post crisis, or it started only after the crisis and gained traction as time passed...is difficult to say, but a paradigm shift in the entire approach of Enterprise Solution Sales has been there for sure.

As a part of the Random Walk series on this blog, I thought I'd cover this intriguing topic about how not just the presentations, but the entire approach towards Enterprise Solution Sales has undergone a sea change. But before that, just to bring everyone on the same page, let me define what I understand by Sales of Enterprise Solutions...

Understanding China and Japan

I usually don't put a post that's just a review of a post on some other blog...but I'll make an exception for this one...Here's a conversation posted in John Mauldin's Outside the Box section, with Vitaliy Katsenelson (VK), the Chief Investment Officer of Investment Management Associates Inc., and the author of Active Value Investing.

Long but amazingly well-done interview...real perspectives on China and Japan, put in a simple way, with applicability to the rest of the world, more specifically, the US.

I'll summarize VK's point of view on China, but this summary will be as much a substitute to the interview as a trailer is for a classic movie...so do watch the trailer, but don't miss the movie...!

China is a bubble which will burst eventually, due to the following reasons:

US Housing - Interesting developments & Interlinkages with Australia

US Housing starts have risen for the first time in the last 3 months...according to a report, housing starts rose to a 555k annual rate (annual rate implies that based on last month's increase, if the same increase is taken for the rest of the year, you'll close the year with 555k number. Its like saying if my revenues for Q1 of this year were 10$, my annual rate of revenue is 40$ ($10*4 quarters)). However, the building permits fell 4% to 530k annual rate.

Let's first start by understanding what "Housing Starts" means...