I was just going through this headline in economictimes website "Stocks fall on US, China economic news" and I was wondering what is really happening in the world economy?

We see China posting slow growth (taunted to be the driver of world economy) USA still crawls, UK's debt mounting all the time and whatever our politicians say India is no better. Because I myself and my friends experience the difference of the present time and time we are flooded with offers in 2007. I can tell you one of my friend who has an experience of 5 years and working as a relationship manager is finding it very hard to even schedule a prospective interview for himself. And the hikes that are announced by most of the companies are only in paper's or in peanuts.

On the basis of current situation I'm actually wondering about two things about India.

1. The stock market keeps on rising - This increase is may be due to the fact that FII's are pouring in money. But china being a FII's darling has seen their stock market value coming down. But that does not seems to be the case with India. Is Indian stock market rising just because of FII's or Indian public is investing in stocks? Or Is India really immune?

2. Real Estate - I have heard and seen in most of Tamil Nadu that land prices have stagnated or have come down in a very few areas, but in most of the cities and towns the sellers are quoting those absurd prices with no takers, but still the sellers or hanging on to the price. Where it is all going to end? Will RE as whole (flats, land) survive this period or the imminent depression predicted by economists like Paul Krugman will sweep the world and India.

I would like to know your thoughts on it. I know there are people in this forum who say the RE is going to rise all the time and there people who say the RE will go down in short term. Let's see what we can get out of this thread?
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  • We have been a fool's paradise for some time now ...

    Originally Posted by sridharchennai
    Is finally things are getting unsettled like 2008, I see the similarities now. Cisco the networking giant has announced that it will cut jobs, HSBC has also announced that it will cut 10000 jobs, US is struggling to rise it's debt limit.

    To confirm further, my friends in textile industry say the orders from europe has completely dried up and now they are even struggling to run to their full capacity and most of the companies depend on bank loans for even paying monthly salary. This is not exaggeration, but this is what happening in manchester of south india. Textile industry is generally the pulse of the future as they book orders for the future.

    Moreover, the same happened in 2008 and we know what happened next.



    Nothing new Sridhar. The only difference between me (and a few guys like me) is that we knew that economy never really improved but seemingly improved because a lot of money was circulated into it (loans, Govt spending, etc) and this made many people think the recession was past.

    But there is a limit to everything. Excessive money circulated without any backing of REAL increase in productivity and consumption will eventually result in inflation taking off and a responsible RBI was forced to jump in before they too lost control of it. So the interest rates are being raised aggressively to tame inflation.

    But our general population would like to see interest rates as RBI's / Govts problem and insist that they should do something about it, while merrily overconsuming with more and more loans.

    It appears the cycle is turning now.

    Unfortunately the whole world is synchronised in this kind of behavior - since Central Bankers have implemented similar policies - and we are simultaneously being hit by a massive slowdown in every other economy, in a much worse way than ours. So, export economy is kaput. And to make it really bad the domestic consumption (which people always thought will keep chugging along whatever happens to rest of world) is also going kaput.

    Only place where I will differ with you is, this is going to be worse than 2008! As we are getting into a recession in a much weaker position.

    cheers
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  • hi, what if they print more money. i think the present situation in US is due to their decision they will not come up with another QE, looking at present scenario they will come with another one, dont know when it will end, and where r they heading to?
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  • Originally Posted by snt2011
    hi, what if they print more money. i think the present situation in US is due to their decision they will not come up with another QE, looking at present scenario they will come with another one, dont know when it will end, and where r they heading to?


    Hi Snt,

    That's very much possible. And this will lead to hyperinflation and it will lead to more problems before finally it drag's down the whole world. For me, if US is going to go down they will not go down alone, they will make sure the whole world goes down with them.

    Regards,
    Sridhar
    CommentQuote
  • Originally Posted by wiseman
    Nothing new Sridhar. The only difference between me (and a few guys like me) is that we knew that economy never really improved but seemingly improved because a lot of money was circulated into it (loans, Govt spending, etc) and this made many people think the recession was past.

    But there is a limit to everything. Excessive money circulated without any backing of REAL increase in productivity and consumption will eventually result in inflation taking off and a responsible RBI was forced to jump in before they too lost control of it. So the interest rates are being raised aggressively to tame inflation.

    But our general population would like to see interest rates as RBI's / Govts problem and insist that they should do something about it, while merrily overconsuming with more and more loans.

    It appears the cycle is turning now.

    Unfortunately the whole world is synchronised in this kind of behavior - since Central Bankers have implemented similar policies - and we are simultaneously being hit by a massive slowdown in every other economy, in a much worse way than ours. So, export economy is kaput. And to make it really bad the domestic consumption (which people always thought will keep chugging along whatever happens to rest of world) is also going kaput.

    Only place where I will differ with you is, this is going to be worse than 2008! As we are getting into a recession in a much weaker position.

    cheers


    Yes Wisey, it's all fake. But I have a question related to India. We know when the recession comes IT, ITES, Textile and other industries will either cut salaries and retrench people to survive and this makes the whole RE and other prices to go down.

    My question is for the past 5 years there were huge scams all over India and where all this money will go? Will it create a situation like the common man like you and me will suffer the recession. But the RE prices and other prices will be inflated by the dirty money of politicians in India.

    Regards,
    Sridhar
    CommentQuote
  • Why won't prices come down when jobs are lost?

    Originally Posted by sridharchennai
    Yes Wisey, it's all fake. But I have a question related to India. We know when the recession comes IT, ITES, Textile and other industries will either cut salaries and retrench people to survive and this makes the whole RE and other prices to go down.

    My question is for the past 5 years there were huge scams all over India and where all this money will go? Will it create a situation like the common man like you and me will suffer the recession. But the RE prices and other prices will be inflated by the dirty money of politicians in India.

    Regards,
    Sridhar



    There is a lot of logic based on hope that, since Politicians have plundered money through land acquisition prices will not come down.

    But is there data to show that say, 80% of all land and buildings are in the hands of cash-rich, black-moneyed politicians?

    In my opinion (I may be wrong), though these people may have bought cheap and sold costly to builders who, in turn sold it for a profit to you and me, please note that, but for a small amount of land and building, the politician would not get rich until he SELLS the cheaply acquired land.

    I suspect that much of the riches have been transfered from you and me via the builder (who took his cut) to these bloodsuckers. Now its you and me who have to pay current and future earnings to the bank and who are stuck with this debt.

    Of course there are also many builders who have paid the bloodsuckers and are now owing money to the banks themselves.

    If this logic is largely true, then the slide will happen when you and me start losing jobs and income which will create NPAs and it will also result in sales going down, resulting in more NPAs courtesy builders.

    Ultimately the banks will repossess these homes and WILL come to market to dispose of them at ANY price.

    So, its all about the jobs - and income. If this start sliding, expect RE market will start going down, both in liquidity (first) and then in price. This is obvious from various examples all over the world. Why should we be different?

    Any problem with this logic? Of course, it may take time so long as money printing is being done!

    cheers
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  • I just thought of saying this. What happens if US economy comes down or what happens if whole world comes down...Is that end of world? .. Will we stop living? .. Will we stop eating?..Isnt the answer a BIG NO?...


    So to keep it simple just think about stuff which you can control and leave rest to ...(whomsoever you think :-))

    HAVE FUN! Enjoy Life! Note you can live even without single penny..
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  • You are too cool :)

    Originally Posted by gayuraj
    I just thought of saying this. What happens if US economy comes down or what happens if whole world comes down...Is that end of world? .. Will we stop living? .. Will we stop eating?..Isnt the answer a BIG NO?...


    So to keep it simple just think about stuff which you can control and leave rest to ...(whomsoever you think :-))

    HAVE FUN! Enjoy Life! Note you can live even without single penny..
    CommentQuote
  • Originally Posted by sridharchennai
    Yes Wisey, it's all fake. But I have a question related to India. We know when the recession comes IT, ITES, Textile and other industries will either cut salaries and retrench people to survive and this makes the whole RE and other prices to go down.

    My question is for the past 5 years there were huge scams all over India and where all this money will go? Will it create a situation like the common man like you and me will suffer the recession. But the RE prices and other prices will be inflated by the dirty money of politicians in India.

    Regards,
    Sridhar



    Well Well Mr Sridhar,

    Had you been in Dubai in 2008 ,you would have seen the fun.
    Everybody said dubai property cannot go down because the king has so much money that he can buy off each flat and house that comes up for sale and thus prevent downslide in prices of RE in Dubai.
    And see the condition now...........
    It seems even black money do not want to go for the depreciating asset.............
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  • Originally Posted by vatsalbajpai
    Well Well Mr Sridhar,

    Had you been in Dubai in 2008 ,you would have seen the fun.
    Everybody said dubai property cannot go down because the king has so much money that he can buy off each flat and house that comes up for sale and thus prevent downslide in prices of RE in Dubai.
    And see the condition now...........
    It seems even black money do not want to go for the depreciating asset.............


    Vatsalbajpai - I was here in this forum for the past three years (though I post very rarely) and I was sharing the sentiment that the RE is abnormally inflated for the past three years and always expected it to come down when the world printing presses run out of ink.

    In my previous post I was not saying that the RE will not go down because of black money, I just have doubts like the black money will be able to save RE, which clearly answered by Wisey and you (thanks for that)

    Moreover, i think two weeks back myself and my cousin where in home fair which is conducted by LIC in Chennai. When we entered the fair we had a very small though of buying a flat, but after getting in we literally came out in 15 mins. The properties are that much inflated.

    Myself and cousin earn around nearly 6 digit income per month, but still our view is we can't afford it. From the prices i saw, a person can only buy flat if his take salary or monthly business profit is more than a lac per month.

    Regards,
    Sridhar
    CommentQuote
  • Originally Posted by gayuraj
    I just thought of saying this. What happens if US economy comes down or what happens if whole world comes down...Is that end of world? .. Will we stop living? .. Will we stop eating?..Isnt the answer a BIG NO?...


    So to keep it simple just think about stuff which you can control and leave rest to ...(whomsoever you think :-))

    HAVE FUN! Enjoy Life! Note you can live even without single penny..


    gayuraj - it's easy to say, just keep it simple silly for people who do not have huge loans and for people who do not have huge EMI's to take care. But, think about people who have huge loans and EMI's and if they lose their job or their salary getting reduced, it's not simple and they can't keep it simple.

    Regards,
    Sridhar
    CommentQuote
  • Originally Posted by wiseman
    There is a lot of logic based on hope that, since Politicians have plundered money through land acquisition prices will not come down.

    But is there data to show that say, 80% of all land and buildings are in the hands of cash-rich, black-moneyed politicians?

    In my opinion (I may be wrong), though these people may have bought cheap and sold costly to builders who, in turn sold it for a profit to you and me, please note that, but for a small amount of land and building, the politician would not get rich until he SELLS the cheaply acquired land.

    I suspect that much of the riches have been transfered from you and me via the builder (who took his cut) to these bloodsuckers. Now its you and me who have to pay current and future earnings to the bank and who are stuck with this debt.

    Of course there are also many builders who have paid the bloodsuckers and are now owing money to the banks themselves.

    If this logic is largely true, then the slide will happen when you and me start losing jobs and income which will create NPAs and it will also result in sales going down, resulting in more NPAs courtesy builders.

    Ultimately the banks will repossess these homes and WILL come to market to dispose of them at ANY price.

    So, its all about the jobs - and income. If this start sliding, expect RE market will start going down, both in liquidity (first) and then in price. This is obvious from various examples all over the world. Why should we be different?

    Any problem with this logic? Of course, it may take time so long as money printing is being done!

    cheers


    Hi Wisey,

    As always your opinion sounds logic and I buy your opinion. I think I should atleast get you some beers :bab (48)::bab (48): for providing so much of information over the years.

    Regards,
    Sridhar
    CommentQuote
  • Originally Posted by wiseman
    There is a lot of logic based on hope that, since Politicians have plundered money through land acquisition prices will not come down.

    But is there data to show that say, 80% of all land and buildings are in the hands of cash-rich, black-moneyed politicians?

    In my opinion (I may be wrong), though these people may have bought cheap and sold costly to builders who, in turn sold it for a profit to you and me, please note that, but for a small amount of land and building, the politician would not get rich until he SELLS the cheaply acquired land.

    I suspect that much of the riches have been transfered from you and me via the builder (who took his cut) to these bloodsuckers. Now its you and me who have to pay current and future earnings to the bank and who are stuck with this debt.

    Of course there are also many builders who have paid the bloodsuckers and are now owing money to the banks themselves.

    If this logic is largely true, then the slide will happen when you and me start losing jobs and income which will create NPAs and it will also result in sales going down, resulting in more NPAs courtesy builders.

    Ultimately the banks will repossess these homes and WILL come to market to dispose of them at ANY price.

    So, its all about the jobs - and income. If this start sliding, expect RE market will start going down, both in liquidity (first) and then in price. This is obvious from various examples all over the world. Why should we be different?

    Any problem with this logic? Of course, it may take time so long as money printing is being done!

    cheers


    Very good logic Wiseman. Totally agree with SridharChennai above.

    Inflation (oil and food mainly) and High Interest rates are the biggest concern of people right know. However a unbeatable faith of the people that the job market is strong is the only bridge which is not making the people (people includes yours truly as well :)) to panic yet.

    However when the faith that job market will be strong for years to come and we can take whatever risk we can, a strong job market will back us up for another 15-20 years, India is future - when this faith is broken, all hell will break lose.

    Please let me continue (if it's ok with you Wiseman) about what would happen next in the logical sequence you have so neatly explained above.

    When people are at risk of losing jobs or lose jobs, they will just walk out of the deal and surrender the flats they had booked to Banks. Even if someone loses a few lakhs ( let us assume around 15-20% of flat price) they will walk out as they won't be willing to stick around to pay another 30,40 or 50 lakhs for another 15-20 years. Walking out losing a few lakhs already spent is better option then trying to hold for another 15-20 years if jobs are at risk. So it's the Banks which will get the axe.

    Demand has to fall drastically for everything.



      Demand for expensive Flats must fall. People must start questioning and not willing to pay whatever the builder demands. Even new rules must be floated to control price rise. Why can't government impose Price Controls on flat or plot prices in middle class India :D. They impose price controls on other stuff, why not on flats and plots.
      People must shift from cars to 2 wheelers and 2 wheelers to public transport. Why can't government provide good quality public transport or at least facilitate good private operators to operate quality buses and metros in cities.
      Stop watching every shit movie in multiplexes paying Rs.100 (plus Rs.12.5 service tax) for a cup of coke every time. Watch good movies only once in a while in cinemas.
      Stop paying Rs.25 (plus Rs.3 service tax)for a small cup of coffee. Stop paying Rs.400 (Plus Rs. 60 service tax)for a medium size pizza ( when I was a kid which is not very long back by the way, Rs 1.50 ( no service tax during those days) for a veg puff was considered a privilege to do kaka to my mother every day).


      Everything is in our control.
      Sharks like businessmen, entertainers and politicians will always attract ( they will become millionaires and billionaires). We people will be looted in this whole marketing maya.

      Walking out of the rat race is always better then walking out a deal isn't it?Sharks like businessmen, entertainers and politicians will always attract ( they will become millionaires and billionaires). We people will be looted in this whole marketing maya.

      Walking out of the rat race is always better then walking out a deal isn't it?Sharks like businessmen, entertainers and politicians will always attract ( they will become millionaires and billionaires). We people will be looted in this whole marketing maya.

      Walking out of the rat race is always better then walking out a deal isn't it?Sharks like businessmen, entertainers and politicians will always attract ( they will become millionaires and billionaires). We people will be looted in this whole marketing maya.

      Walking out of the rat race is always better then walking out a deal isn't it?Sharks like businessmen, entertainers and politicians will always attract ( they will become millionaires and billionaires). We people will be looted in this whole marketing maya.

      Walking out of the rat race is always better then walking out a deal isn't it?Sharks like businessmen, entertainers and politicians will always attract ( they will become millionaires and billionaires). We people will be looted in this whole marketing maya.

      Walking out of the rat race is always better then walking out a deal isn't it?Sharks like businessmen, entertainers and politicians will always attract ( they will become millionaires and billionaires). We people will be looted in this whole marketing maya.

      Walking out of the rat race is always better then walking out a deal isn't it?
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  • Sridhar, Not want to get into arguement (as I am simple and silly) but to answer you.. Who created the complex scenario (hugh loans & EMI's?)..Just check the mirror you will have the answer... What you sow is what you ...

    Have fun.
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  • Originally Posted by gayuraj
    Sridhar, Not want to get into arguement (as I am simple and silly) but to answer you.. Who created the complex scenario (hugh loans & EMI's?)..Just check the mirror you will have the answer... What you sow is what you ...

    Have fun.


    You are absolutely right, I was also speaking about the people who have got huge loans and EMI's, but sadly the percentage of people having huge loans are increasing due to pressure from society. A basic question now everyone asks to a 30 year old is do you own a flat? Did the generation of our father's own a house at the age of 30? So, the younger generation apart from their wishlist they also bend to the pressure from the society.

    As far as the keep it simple silly part is concerned, it's just a one liner from Tata Docomo ad, nothing intentional.

    Regards,
    Sridhar
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  • Well it's time for reality check then.. It's better to get back to our age old strategy (i.e. Save then buy which had worked well). As we don't want to end up like US.

    I didnt mind the silly part :). Enjoy.,,
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