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Builders & Real Estate Bulls Theory Proved Wrong

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Builders & Real Estate Bulls Theory Proved Wrong

Last updated: November 1 2016
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  • Re : Builders & Real Estate Bulls Theory Proved Wrong

    For a brief history of the perennial tussle between the RBI and the govt - T C A Srinivasa-Raghavan: Raghuram Rajan's fine line | Business Standard Column

    The author is one of the better journalists around, more so given that he draws interesting analogies from past events. Writes regularly in the business-standard.

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    • Re : Builders & Real Estate Bulls Theory Proved Wrong



      Rs 40 Lakh flat for Kashmiri Pandits in Srinagar - The Economic Times

      Do we have IREF forum for Kashmir/Jammu/Srinagar?
      Affordable housing boom!!!!
      Will the RE bears be happy now? Either for economic or patriotic reasons...
      Last edited by gppande; December 30 2014, 09:39 AM.

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      • Re : Builders & Real Estate Bulls Theory Proved Wrong

        Originally posted by herohiralal View Post
        Good job Mr Jaitley!! High time someone stood up to the madman in the RBI.

        RBI to blame for slowdown in manufacturing: Arun Jaitley - The Times of India

        "What was earlier said in private is now coming out in the open. On Monday, finance minister Arun Jaitley said the Reserve Bank of India's insistence on keeping high interest rates as the "singular factor" responsible for the slowdown in the manufacturing sector. He also rebutted governor Raghuram Rajan's critique of Narendra Modi's 'Make in India' initiative, setting the stage for a fresh round of tussle between the central bank and the government.

        "Whether 'Make in India' is made for consumers within India or outside is not so relevant. The principle today says that consumers across the world like to purchase products which are cheaper and are of good quality. They hire services which are cheaper and of good quality," Jaitley said while launching a workshop on Make in India."
        For the benefit of the uninitiated, could you please elaborate as to why you consider Arun Jaitley more knowledgeable about business and economics than Mr.Rajan?

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        • Re : Builders & Real Estate Bulls Theory Proved Wrong

          Originally posted by herohiralal View Post
          Good job Mr Jaitley!! High time someone stood up to the madman in the RBI.

          RBI to blame for slowdown in manufacturing: Arun Jaitley - The Times of India

          "What was earlier said in private is now coming out in the open. On Monday, finance minister Arun Jaitley said the Reserve Bank of India's insistence on keeping high interest rates as the "singular factor" responsible for the slowdown in the manufacturing sector. He also rebutted governor Raghuram Rajan's critique of Narendra Modi's 'Make in India' initiative, setting the stage for a fresh round of tussle between the central bank and the government.

          "Whether 'Make in India' is made for consumers within India or outside is not so relevant. The principle today says that consumers across the world like to purchase products which are cheaper and are of good quality. They hire services which are cheaper and of good quality," Jaitley said while launching a workshop on Make in India."
          All Politicians are basically paid shills and servants of their masters, the ones who fund them ... Big Business.

          So, Jaitley is talking His Master's Voice, that interest rate decline by 25-50 basis points is somehow going to get the economy going. But we are missing the much bigger Hippo in the room ... Excess Debt!

          Companies are too loaded with this. Individuals are too loaded with this. And by too loaded, one means that these people no longer have the boom times to continue to put money into their pockets to keep paying off debt. So, they are not in any position to take on more debt.

          And since Economic Growth has largely been on the back of freshly borrowed debt in ever-increasing portions, with this loss of appetite, fresh Economic Growth is going to come when people find the appetite for fresh debt.

          Do we really think that, if banks cut interest rates 0.5% everyone will go out and borrow lakhs and binge on 4K TVs and fancy cars?

          Do we really think that businesses, who find foreign markets getting very difficult to sell into (because of worldwide slowdown and high unemployment and hardship) and domestic market with people increasingly trying to make ends meet and not in a mood to splurge, will start borrowing more and producing more of stuff that does not sell, just to stuff the channel with their products and claim sales OR keep them in their own stockyards just so economy may boom?

          Rajan has been right there at the top and not only seen all this first hand for a long time, he also has the distinction to call a spade a spade right in the face of Bernanke and Larry Summers and has now been proven right.

          More than almost anyone else in the world, he perhaps knows the REAL state of the world's economic condition and may be very fearful of the possible knock-on effect of a global depression on India in the coming years.

          Given that a significant chunk of our FX reserves is not earnings but debt parked here, he knows the highly dangerous effect of an export-dependent strategy - recollect the Asian Tigers Crisis of 1998 and its direct impact on the LTCM collapse. If such a thing happens (and he believes the danger is clear and present), out FX reserves will halve in a jiffy, currency will lose in double digits and inflation will soar ... all within double-quick time.

          We will see the Rouble happening to our Rupee and under our current precarious economic conditions, that will set our country back several years, perhaps even a decade.

          IMHO, I'm in Rajan's camp and he should be left alone to do his job as he sees fit and not as Politician's see fit (for their narrow political purposes). If Jaitley was so good, why was he not appointed as RBI Guvnor? He should do the jo he was elected for and not go poking his nose into everyone else's business as though he knows how to do it.

          Basically its not Jaitley's fault. He will say whatever his masters ask him to. Perhaps its a Babu-level fight with the Finance, Economics and Commerce Ministry babus taking potshots at each other by placing words in his mouth?

          cheers

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          • Re : Builders & Real Estate Bulls Theory Proved Wrong

            Originally posted by herohiralal View Post
            Correcting ur incorrect/false posts once again. When are u going to stop posting such drivel?

            It affects the quality of the forum. Finding more engaging and correct data and analysis on other social media avenues. At least for the sake of the forum start posting correct data

            TCS allays layoff fears: No pink slips for employees - Moneycontrol.com


            "The company firmly denies reports which had claimed that a substantial number of employees will face the axe as part of a restructuring exercise"
            LOL . So this news also went down the drain. just like like NPA boo boo, Italy and Spain.

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            • Re : Builders & Real Estate Bulls Theory Proved Wrong

              Good post Wiseman.
              I too think that more than inflation, the RBI's real worry may be a dollar exodus next year due to a so called 'liquidity event'. Fed raising rates, Russian default, Chinese slowdown worsening, take your pick. Interestingly, some of the larger economies that escaped relatively unscathed in 2008 are now feeling the heat - BRICS/Canada/Australia . The joke going around - BRIC = Bloody ridiculous investment concept

              As an investor in Indian equity markets, I am hoping none of these happen. But history, with a nasty habit of repeating itself, suggests otherwise.

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              • Re : Builders & Real Estate Bulls Theory Proved Wrong

                Originally posted by wiseman View Post
                All Politicians are basically paid shills and servants of their masters, the ones who fund them ... Big Business.
                And RBI governors are honest and hence should be believed? Why did Mr Rajan then just handout multiple bailout to banks and big business?


                Do we really think that, if banks cut interest rates 0.5% everyone will go out and borrow lakhs and binge on 4K TVs and fancy cars?
                Depends on what the political masters ask the banks to do. The BJP govt has to appoint chiefs for BoB, Canara and PNB.

                SBI known to make crazy loans for crazy projects.

                If rates are cuts govt bond yields go down or bond prices go up so banks can mark to market their govt bond holding and show profit i.e more equity hence can lend mode. So 50 bps rate cut can do a lot.



                Do we really think that businesses, who find foreign markets getting very difficult to sell into (because of worldwide slowdown and high unemployment and hardship) and domestic market with people increasingly trying to make ends meet and not in a mood to splurge, will start borrowing more and producing more of stuff that does not sell, just to stuff the channel with their products and claim sales OR keep them in their own stockyards just so economy may boom?
                Apply this in reverse now. Why do u think then high interest rates will reduce inflation? If the state of the Indian economy is not dependent on the interest rates then why not get RBI to raise interest rates again. Why were BoJ, BoE, ECB and US Fed and all other central banks cutting rates when their respective GDPs were slowing??

                Rajan has been right there at the top and not only seen all this first hand for a long time, he also has the distinction to call a spade a spade right in the face of Bernanke and Larry Summers and has now been proven right.
                Stop being a fan boy. He is human and has spent his whole life as a professor or a economist. Hasnt had a proper job. Applies to other central bankers as well. Dont believe in blindly following someone.

                Given that a significant chunk of our FX reserves is not earnings but debt parked here, he knows the highly dangerous effect of an export-dependent strategy - recollect the Asian Tigers Crisis of 1998 and its direct impact on the LTCM collapse. If such a thing happens (and he believes the danger is clear and present), out FX reserves will halve in a jiffy, currency will lose in double digits and inflation will soar ... all within double-quick time.
                Yes lets wait for the black swan event and postpone building infra and industry

                We will see the Rouble happening to our Rupee and under our current precarious economic conditions, that will set our country back several years, perhaps even a decade.
                Yes India and Russia are the same. India is annexing the island of Seychelles and the African Union has asked NATO for help and the whole western world is imposing sanction on Indian IT service exports!!

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                • Re : Builders & Real Estate Bulls Theory Proved Wrong

                  Originally posted by southsea View Post
                  Good post Wiseman.
                  I too think that more than inflation, the RBI's real worry may be a dollar exodus next year due to a so called 'liquidity event'. Fed raising rates, Russian default, Chinese slowdown worsening, take your pick. Interestingly, some of the larger economies that escaped relatively unscathed in 2008 are now feeling the heat - BRICS/Canada/Australia . The joke going around - BRIC = Bloody ridiculous investment concept

                  As an investor in Indian equity markets, I am hoping none of these happen. But history, with a nasty habit of repeating itself, suggests otherwise.
                  So u missed the whole burst of the commodity sector - Iron, Oil, Steel, Copper and Coal.

                  Now go back and check online the top exporters of Iron, Copper, Oil and Coal. Brazil, Aus, Canada, Russia.

                  That leaves India and China. Both will benefit a lot from falling commodity prices.

                  If RBI's worry is about dollar exodus then it should be buying dollar right now. Interest rates and dollar exodus are unrelated. Indian govt allows only about $25 billion to be invested into govt bonds. So the fluid dollars that are in the country are mostly FII investments and NRI deposits.

                  Taking out FDI investments takes years.

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                  • Re : Builders & Real Estate Bulls Theory Proved Wrong

                    Originally posted by Counterfeit View Post
                    For the benefit of the uninitiated, could you please elaborate as to why you consider Arun Jaitley more knowledgeable about business and economics than Mr.Rajan?
                    Check my previous posts on inflation in India and hows it nor related to interest rates but more to do with supply side issues, monsoon and oil. Use search facility provided by the forum.

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                    • Re : Builders & Real Estate Bulls Theory Proved Wrong

                      Interest rates and dollar exodus are unrelated.
                      You should be lecturing the Russian (raised rates to 17%) and the Belarus federal bankers (50% I think !) with your theories. What do they know about raising rates to prevent capital flight and keep the ruble afloat. Learn from our resident central banker.

                      So u missed the whole burst of the commodity sector
                      No. You are seeing the symptoms and not the cause - Overcapacity in the largest consumer of commodities the world has ever seen.

                      That leaves India and China. Both will benefit a lot from falling commodity prices.

                      And yet as we speak, China with immense overcapacity in almost everything from housing to steel, slows down further. Zombie towns is now apparently an old story. The newest thing in town there are zombie factories. China zombie factories kept open to give illusion of prosperity - http://www.ft.com/intl/cms/s/0/274da...44feabdc0.html

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