Warning : Lots of self praise ahead ;P
This article was long overdue. Its finally here. It was my new year resolution to get into shape, and with two months to go, I'm confident that this will be the only resolution that I'll manage to keep. I intend to write this as a series, and since this is the first part of the series, Ill list down my feelings about exercising and dieting in general. Later on, I plan to write on specific exercises that help you to tone your body and get into shape.
I first hit the gym 3 years ago. But it was a failed attempt. I was going with my brother who was my gym partner. And as I was still studying and he was working, our times never matched, and not surprisingly I wasted almost 6 months of the gym fee. That is when I realized that, keeping yourself fit should never be that costly. So I made myself a promise that I would start a home gym.
That promise materialized this year. What probably triggered this was a general visit to the family doctor, where I checked my weight. I was shocked to see the needle oscillate between 67 and 69. I weighed 68 kilos! I also started to notice the bulge in my waist whenever I used to wear formals. I was slowly getting conscious of my body. Let me tell you, no one, and i mean no one can work out, if they are not self conscious of how they look. You need to take long silent looks in the mirror, and only when you feel the urge to look better will you start working out.
The build up to this was very gradual. First I got 6kg dumbbells, not the fancy steel ones, but cast iron dumbbells which cost around Rs18 per pound, and did a lot of core workouts. This means that you will have to build your inner strength, to be able to sustain the weights. I started with push-ups, pull-ups, dips, parallel bars and power yoga for a whole month. You will be surprised with how much you can improve in one month. Just for example, I barely managed 10 push-ups in the beginning, but at the end of the month I was doing 2 sets of 30 push-ups!
In February I added 10kg dumbbells and a bench to my collection. I started with weekly workouts. This basically means that you concentrate on different parts of the body on different days. This is a proved method to increase the pace of muscle development, rather than working on the entire body everyday. I started to keep a schedule. The week started on Mondays with Triceps, then it was Chest, Wednesdays I concentrated on lower body like thigh and calf muscle. Thursdays I worked on my biceps, followed by shoulders and lats on Friday. Saturdays I concentrated on my back. Sunday was the rest day.
In March I added a treadmill to my home gym. The basic reason to shell out 20k on a treadmill was to do cardio workouts. In the beginning I used to run for 1km. Slowly it picked up and now I run 5 km in 30 mins.
This routine continued for couple of months. This was when Bala decided to join me. I really liked this part, as Bala was a newcomer to the world of gymming. Initially I was his tutor/coach, but bala being a quick learner, picked up everything very quickly and thus my joy of being a mentor was short lived. But with this, there was another kind of joy, that of having a partner to do workouts with. We used to put music in our laptops, discuss the days happenings. What me and bala also started was to build our abs. We used to crunch our abs everyday. Couple of sets of 20 reps each. This is by far the most difficult muscle to shape. Especially when you are a vegitarian and addicted to ghee, cheese, and chocolates. It takes patience, humongous effort, and a balanced diet. Ill get into the diet details in the next part.
By the month of July, I had started to see significant improvements in my body structure. And by this time I was also addicted to working in my home gym. I always used to look forward to this part of the day. Its true that gymming can get addictive. You start to get a rush when you crunch your biceps, or the rush of boold into your head when you complete 2 sets of pull-ups can make you feel dizzy. I saw the movie/documentary "Pumping Iron" starring Arnold. There he compares the pleasure factor of working out to be equivalent to that of having sex. Since I haven't yet experienced the latter, Ill go with his word for now :D.
By September, I started to work on my abs in the morning, along with my cardio excercises. This time, I added more variation, doing different workouts for my lower and upper abs, as well as the sides. More details later. But when you start to see the outline of the possible 6 packs, there is no stopping you. Its like a bait to a fish. It grabs your attention, and you will push yourself to extreme levels to get those perfect 6 packs. I'm happy to say that with a determined effort and a conservative yet healthy diet I have been able to get strong 4 packs in my abs and i'm confident that my lower abs will again split to become a 6 pack abs in couple of months time.
The result of 10 months of joy is more joy. I'm now 60kilos. My waist is 29" compared to 32" in January. I'm slim, i'm fit, i'm healthy and i'm happy.
I must say that working out will add a different dimension to your life. It will give you purpose, it will give you a sense of confidence about yourself. It is defenitely a positive investment. I would suggest everyone to try excercising. It is the best precautionary medicine ever!
Friday, October 31, 2008
Friday, October 24, 2008
Another Cousin's marriage
This time the location was different. It was in Hubli which is in Northern Karnataka and also the home town of the bride. Its a pretty big town, with decent facilities. The dry heat in this part of Karnataka will sap your energy in no time. You feel like taking bath every 30 mins. Including the groom we were 55 relatives who travelled from Bangalore to Hubli. The journey was comfortable. The hospitality was great, and the FOOD was spectacular. All in all, it was a fun trip with family and relatives. I wish the newly weds a happy married life. :D
Tuesday, October 14, 2008
Bankruptcy Explained through a story
Once there was a little island country. The land of this country was the tiny island itself. The total money in circulation was 2 dollars as there were only two pieces of 1 dollar coins circulating around.
1) There were 3 citizens living on this island country. A owned the land. B and C each owned 1 dollar.
2) B decided to purchase the land from A for 1 dollar. So, now A and C own 1 dollar each while B owned a piece of land that is worth 1 dollar.
The net asset of the country now = 3 dollars.
3) Now C thought that since there is only one piece of land in the country, and land is non producible asset, its value must definitely go up. So, he borrowed 1 dollar from A, and together with his own 1 dollar, he bought the land from B for 2 dollars.
*A has a loan to C of 1 dollar, so his net asset is 1 dollar.
* B sold his land and got 2 dollars, so his net asset is 2 dollars.
* C owned the piece of land worth 2 dollars but with his 1 dollar debt to A, his net residual asset is 1 dollar.
Thus, the net asset of the country = 4 dollars.
4) A saw that the land he once owned has risen in value. He regretted having sold it. Luckily, he has a 1 dollar loan to C. He then borrowed 2 dollars from B and acquired the land back from C for 3 dollars. The payment is by 2 dollars cash (which he borrowed) and cancellation of the 1 dollar loan to C. As a result,
*A now owned a piece of land that is worth 3 dollars. But since he owed B 2 dollars, his net asset is 1 dollar.
* B loaned 2 dollars to A. So his net asset is 2 dollars.
* C now has the 2 coins. His net asset is also 2 dollars.
The net asset of the country = 5 dollars.
A bubble is building up.
(5) B saw that the value of land kept rising. He also wanted to own the land. So he bought the land from A for 4 dollars. The payment is by borrowing 2 dollars from C, and cancellation of his 2 dollars loan to A.
* As a result, A has got his debt cleared and he got the 2 coins. His net asset is 2 dollars.
* B owned a piece of land that is worth 4 dollars, but since he has a debt of 2 dollars with C, his net Asset is 2 dollars.
* C loaned 2 dollars to B, so his net asset is 2 dollars.
The net asset of the country = 6 dollars; even though, the country has
only one piece of land and 2 Dollars in circulation.
(6) Everybody has made money and everybody felt happy and prosperous.
(7) One day an evil wind blew, and an evil thought came to C's mind. "Hey, what if the land price stop going up, how could B repay my loan. There is only 2 dollars in circulation, and, I think after all the land that B owns is worth at most only 1 dollar, and no more."
(8) A also thought the same way.
(9) Nobody wanted to buy land anymore.
* So, in the end, A owns the 2 dollar coins, his net asset is 2 dollars.
* B owed C 2 dollars and the land he owned which he thought worth 4 dollars is now 1 dollar. So his net asset is only 1 dollar.
* C has a loan of 2 dollars to B. But it is a bad debt. Although his net asset is still 2 dollars, his Heart is palpitating.
The net asset of the country = 3 dollars again.
(10) So, who has stolen the 3 dollars from the country? Of course, before the bubble burst B thought his land was worth 4 dollars. Actually, right before the collapse, the net asset of the country was 6 dollars on paper. B's net asset is still 2 dollars, his heart is palpitating.
(11) B had no choice but to declare bankruptcy. C as to relinquish his 2 dollars bad debt to B, but in return he acquired the land which is worth 1 dollar now.
* A owns the 2 coins; his net asset is 2 dollars.
* B is bankrupt; his net asset is 0 dollar. (He lost everything)
* C got no choice but end up with a land worth only 1 dollar
The net asset of the country = 3 dollars.
End of the story; BUT
There is however a redistribution of wealth.
A is the winner, B is the loser, C is lucky that he is spared.
A few points worth noting -
(1) when a bubble is building up, the debt of individuals to one another in a country is also building up.
(2) This story of the island is a closed system whereby there is no other country and hence no foreign debt. The worth of the asset can only be calculated using the island's own currency. Hence, there is no net loss.
(3) An over-damped system is assumed when the bubble burst, meaning the land's value did not go down to below 1 dollar.
(4) When the bubble burst, the fellow with cash is the winner. The fellows having the land or extending loan to others are the losers. The asset could shrink or in worst case, they go bankrupt.
(5) If there is another citizen D either holding a dollar or another piece of land but refrains from taking part in the game, he will neither win nor lose. But he will see the value of his money or land goes up and down like a see saw.
(6) When the bubble was in the growing phase, everybody made money.
(7) If you are smart and know that you are living in a growing bubble, it is worthwhile to borrow money (like A) and take part in the game. But you must know when you should change everything back to cash.
(8) As in the case of land, the above phenomenon applies to stocks as well.
(9) The actual worth of land or stocks depends largely on psychology (or speculation).
*P.S: Got this story as a forward.
**P.P.S: I'm not that creative ;)
1) There were 3 citizens living on this island country. A owned the land. B and C each owned 1 dollar.
2) B decided to purchase the land from A for 1 dollar. So, now A and C own 1 dollar each while B owned a piece of land that is worth 1 dollar.
The net asset of the country now = 3 dollars.
3) Now C thought that since there is only one piece of land in the country, and land is non producible asset, its value must definitely go up. So, he borrowed 1 dollar from A, and together with his own 1 dollar, he bought the land from B for 2 dollars.
*A has a loan to C of 1 dollar, so his net asset is 1 dollar.
* B sold his land and got 2 dollars, so his net asset is 2 dollars.
* C owned the piece of land worth 2 dollars but with his 1 dollar debt to A, his net residual asset is 1 dollar.
Thus, the net asset of the country = 4 dollars.
4) A saw that the land he once owned has risen in value. He regretted having sold it. Luckily, he has a 1 dollar loan to C. He then borrowed 2 dollars from B and acquired the land back from C for 3 dollars. The payment is by 2 dollars cash (which he borrowed) and cancellation of the 1 dollar loan to C. As a result,
*A now owned a piece of land that is worth 3 dollars. But since he owed B 2 dollars, his net asset is 1 dollar.
* B loaned 2 dollars to A. So his net asset is 2 dollars.
* C now has the 2 coins. His net asset is also 2 dollars.
The net asset of the country = 5 dollars.
A bubble is building up.
(5) B saw that the value of land kept rising. He also wanted to own the land. So he bought the land from A for 4 dollars. The payment is by borrowing 2 dollars from C, and cancellation of his 2 dollars loan to A.
* As a result, A has got his debt cleared and he got the 2 coins. His net asset is 2 dollars.
* B owned a piece of land that is worth 4 dollars, but since he has a debt of 2 dollars with C, his net Asset is 2 dollars.
* C loaned 2 dollars to B, so his net asset is 2 dollars.
The net asset of the country = 6 dollars; even though, the country has
only one piece of land and 2 Dollars in circulation.
(6) Everybody has made money and everybody felt happy and prosperous.
(7) One day an evil wind blew, and an evil thought came to C's mind. "Hey, what if the land price stop going up, how could B repay my loan. There is only 2 dollars in circulation, and, I think after all the land that B owns is worth at most only 1 dollar, and no more."
(8) A also thought the same way.
(9) Nobody wanted to buy land anymore.
* So, in the end, A owns the 2 dollar coins, his net asset is 2 dollars.
* B owed C 2 dollars and the land he owned which he thought worth 4 dollars is now 1 dollar. So his net asset is only 1 dollar.
* C has a loan of 2 dollars to B. But it is a bad debt. Although his net asset is still 2 dollars, his Heart is palpitating.
The net asset of the country = 3 dollars again.
(10) So, who has stolen the 3 dollars from the country? Of course, before the bubble burst B thought his land was worth 4 dollars. Actually, right before the collapse, the net asset of the country was 6 dollars on paper. B's net asset is still 2 dollars, his heart is palpitating.
(11) B had no choice but to declare bankruptcy. C as to relinquish his 2 dollars bad debt to B, but in return he acquired the land which is worth 1 dollar now.
* A owns the 2 coins; his net asset is 2 dollars.
* B is bankrupt; his net asset is 0 dollar. (He lost everything)
* C got no choice but end up with a land worth only 1 dollar
The net asset of the country = 3 dollars.
End of the story; BUT
There is however a redistribution of wealth.
A is the winner, B is the loser, C is lucky that he is spared.
A few points worth noting -
(1) when a bubble is building up, the debt of individuals to one another in a country is also building up.
(2) This story of the island is a closed system whereby there is no other country and hence no foreign debt. The worth of the asset can only be calculated using the island's own currency. Hence, there is no net loss.
(3) An over-damped system is assumed when the bubble burst, meaning the land's value did not go down to below 1 dollar.
(4) When the bubble burst, the fellow with cash is the winner. The fellows having the land or extending loan to others are the losers. The asset could shrink or in worst case, they go bankrupt.
(5) If there is another citizen D either holding a dollar or another piece of land but refrains from taking part in the game, he will neither win nor lose. But he will see the value of his money or land goes up and down like a see saw.
(6) When the bubble was in the growing phase, everybody made money.
(7) If you are smart and know that you are living in a growing bubble, it is worthwhile to borrow money (like A) and take part in the game. But you must know when you should change everything back to cash.
(8) As in the case of land, the above phenomenon applies to stocks as well.
(9) The actual worth of land or stocks depends largely on psychology (or speculation).
*P.S: Got this story as a forward.
**P.P.S: I'm not that creative ;)
Wednesday, October 8, 2008
Time to say TATA to DADA with respect
One of the hot topics this week has been the future "Fab Four" of the Indian Cricket Team. At least we now know that during the Border-Gavaskar series we will be bidding adieu to Sourav Ganguly aka Dada. I have to confess, I have never been a hard core fan of Ganguly. By that I mean I haven't supported him during his "rough patches". But you have to give it to the sheer determination of this guy for staying in the dark for a whole year and making one of the most inspiring comebacks in the history of sports. In his comeback year he scored the most runs by a Indian in that year, achieved his highest score in Tests, and was part of 2 series wins. So, why is everyone questioning his place all of a sudden? Is it because of that one failure in SriLanka, where he scored 96 runs from 6 innings? I don't think so. Like most Indians I feel it is more of a forced exit than a individual decision. I feel it is unfair for someone who has served BCCI for so long, not to be given the right reasons to quit the game. They cant tell that due to age he has slowed down. 5 years ago when he was the captain, he was not a inch faster than he is right now. He was never a good fielder, in fact he was and is a pathetic fielder. Unlike last time when he was dropped, he is told to quit for the wrong reasons. Age should never be a concern for an athlete, until he is performing at his peak. And for me Ganguly is batting at his best in last 1 year. There is a never seen before determination in his batting. Lets take the example of Lance Armstrong, according to me one of the greatest athletes to set foot on earth. He has decided to compete in the Tour at the age of 36. And this is no small team which he is coming into, he is coming into Astana, which contains 2006 tour winner. So, why is that in a country with such patriotic and fanatic fans of the game, do we treat those very people who have brought joy to our lives on numerous occasions with such disdain?
I also completely disagree with the concept of terminating a career with future in perspective. Let me put out the current scenario here. A upcoming player struggles against the system to make it to the national squad. By the time he is noticed in all the domestic games he is 25. By the time he is a permanent member in the starting eleven, he is 32. And when he just about turns 34, all the talk about the seniors start. So he will effectively get 2 years of cricket. And we are not talking about normal players. No. They will get far less to play. We are talking about greats, those who have changed the way people play the game. And I'm all the more ashamed to say that this seems to happen only in India.
I also completely disagree with the concept of terminating a career with future in perspective. Let me put out the current scenario here. A upcoming player struggles against the system to make it to the national squad. By the time he is noticed in all the domestic games he is 25. By the time he is a permanent member in the starting eleven, he is 32. And when he just about turns 34, all the talk about the seniors start. So he will effectively get 2 years of cricket. And we are not talking about normal players. No. They will get far less to play. We are talking about greats, those who have changed the way people play the game. And I'm all the more ashamed to say that this seems to happen only in India.
Monday, October 6, 2008
Fall of Indian Rupee in the Global Market
I was discussing this current trend with one of my friends, and found that I had a naive understanding of the dynamics of the global market. So I did some basic research, and will list down my findings, so that others in my state can benefit out of it.
The discussion started when we saw the newspaper clipping which read that rupee had fallen to a 2 year low against US Dollar. What surprised me the most was "Why the hell is the rupee value falling, when it should have been the other way around? The US market is at its worst, India is not hit as badly as the US, Indian companies are still making a 2 digit growth, then what was the reason for the falling rupee." And to my surprise there was a perfectly valid reason for this.
As I write this, the rupee is trading at 47.2 to a dollar. To put this into some perspective, it was 39.3 to a dollar in January 2008. That is a 20% increase in the value of the dollar in 10 months. Just to illustrate this point, it was not too long ago, the Indian Software giants were sacking people, just because they could not cope with the increase in the value of the rupee to a dollar, which resulted in them getting lesser income for the same client billing.
Let me just give a small description of my understanding on how this index is created. It is calculated as the amount of foreign investment in another country, i.e Amount of Dollars invested in India to the amount of Rupee invested in US. There are many participants in any foreign exchange market. These entities -- like banks, corporations, brokers, even individuals -- buy and sell currencies everyday. Here too the universal economic law of demand and supply is applicable: when there are more buyers for a currency than sellers, its exchange rate rises. Similarly, when there are more sellers of a particular currency than buyers, its exchange rate in the global markets will fall. This does not mean people no longer want money; it only means that people prefer to keep their wealth in some other form or another currency
With this knowledge let me list out the main reasons for the fall in Rupee:
1. The main reasons behind the fall of the rupee are an increased demand for dollars due to a spurt in crude oil prices and the flight of foreign funds from the Indian market (the market situation in India is growing grim by the day, with the main index BSE going below the 12,000 mark as I write this). Demand for rupees, simultaneously, has dipped because capital inflows are down. The American sub-prime crisis that shook the global financial markets has seen unprecedented bailouts and infusion of dollars into the US economy. This infusion has been at a cost of many an emerging market, from where funds have been pulled out to plough back into America. India has been one of the worst hit countries on this count, as foreign funds took flight, thereby making dollars scarce. The sudden and colossal demand for the US dollar has seen it strengthen, while the rupee's exchange rate has depreciated dramatically during the same period. India's stock market regulator, the SEBI, has said that foreign investors sold more Indian shares than they bought.
2. The higher price of imported goods, especially oil that is now ruling at over $90 per barrel, has also led to an increase in domestic inflation and a fall in the value of the Indian currency. High inflation and a strong growth in the Indian economy have already forced the RBI to raise interest rates. The inflation is hovering around 12% mark for the past 2 months.
3. One more reason for the fall of the rupee, as propounded by some economists, is the overseas non-deliverable forward (NDF) market that is not sanctioned by the Reserve Bank of India. An NDF is a non-deliverable forward contract where financial institutions buy forward dollars (that is, they book dollars now for delivery at a predetermined future date) in the Indian market and at the same time sell a similar amount of dollars in an overseas market -- or vice-versa -- so that on the delivery date they make a profit or loss, which is the difference between both the rates.
So what is the conclusion of this? Who gets affected, and more interestingly who is under loss and who is gaining out of the current situation?
As the rupee falls, foreign investors will want bigger returns for their money to compensate for the higher risk. This means that the Indian government, companies and individuals will have to pay more for the money they borrow: in other words, higher interest rates. This will also mean that Indian Govt will have to pay that much more for the foreign loans, like from the World Bank. This could further deter foreign investment, which results in a cumulative effect (people stop investing because the rupee is devalued which is a result of foreign players divesting).
So how do we reverse this trend?
One measure that can be taken by the RBI, is to change the interest rates, so that value of the rupee is appreciated in the global market. Another thing is for RBI to sell US greenbacks in the open market, thereby getting this situation under control momentarily and stopping the spiraling downward trend.
But the best thing to happen is to hope for a bull run in the market, similar to the one we had in 2007. This will ensure that there is more foreign investment, and as a result the demand for dollar falls, and strengthens the rupee considerably.
The discussion started when we saw the newspaper clipping which read that rupee had fallen to a 2 year low against US Dollar. What surprised me the most was "Why the hell is the rupee value falling, when it should have been the other way around? The US market is at its worst, India is not hit as badly as the US, Indian companies are still making a 2 digit growth, then what was the reason for the falling rupee." And to my surprise there was a perfectly valid reason for this.
As I write this, the rupee is trading at 47.2 to a dollar. To put this into some perspective, it was 39.3 to a dollar in January 2008. That is a 20% increase in the value of the dollar in 10 months. Just to illustrate this point, it was not too long ago, the Indian Software giants were sacking people, just because they could not cope with the increase in the value of the rupee to a dollar, which resulted in them getting lesser income for the same client billing.
Let me just give a small description of my understanding on how this index is created. It is calculated as the amount of foreign investment in another country, i.e Amount of Dollars invested in India to the amount of Rupee invested in US. There are many participants in any foreign exchange market. These entities -- like banks, corporations, brokers, even individuals -- buy and sell currencies everyday. Here too the universal economic law of demand and supply is applicable: when there are more buyers for a currency than sellers, its exchange rate rises. Similarly, when there are more sellers of a particular currency than buyers, its exchange rate in the global markets will fall. This does not mean people no longer want money; it only means that people prefer to keep their wealth in some other form or another currency
With this knowledge let me list out the main reasons for the fall in Rupee:
1. The main reasons behind the fall of the rupee are an increased demand for dollars due to a spurt in crude oil prices and the flight of foreign funds from the Indian market (the market situation in India is growing grim by the day, with the main index BSE going below the 12,000 mark as I write this). Demand for rupees, simultaneously, has dipped because capital inflows are down. The American sub-prime crisis that shook the global financial markets has seen unprecedented bailouts and infusion of dollars into the US economy. This infusion has been at a cost of many an emerging market, from where funds have been pulled out to plough back into America. India has been one of the worst hit countries on this count, as foreign funds took flight, thereby making dollars scarce. The sudden and colossal demand for the US dollar has seen it strengthen, while the rupee's exchange rate has depreciated dramatically during the same period. India's stock market regulator, the SEBI, has said that foreign investors sold more Indian shares than they bought.
2. The higher price of imported goods, especially oil that is now ruling at over $90 per barrel, has also led to an increase in domestic inflation and a fall in the value of the Indian currency. High inflation and a strong growth in the Indian economy have already forced the RBI to raise interest rates. The inflation is hovering around 12% mark for the past 2 months.
3. One more reason for the fall of the rupee, as propounded by some economists, is the overseas non-deliverable forward (NDF) market that is not sanctioned by the Reserve Bank of India. An NDF is a non-deliverable forward contract where financial institutions buy forward dollars (that is, they book dollars now for delivery at a predetermined future date) in the Indian market and at the same time sell a similar amount of dollars in an overseas market -- or vice-versa -- so that on the delivery date they make a profit or loss, which is the difference between both the rates.
So what is the conclusion of this? Who gets affected, and more interestingly who is under loss and who is gaining out of the current situation?
As the rupee falls, foreign investors will want bigger returns for their money to compensate for the higher risk. This means that the Indian government, companies and individuals will have to pay more for the money they borrow: in other words, higher interest rates. This will also mean that Indian Govt will have to pay that much more for the foreign loans, like from the World Bank. This could further deter foreign investment, which results in a cumulative effect (people stop investing because the rupee is devalued which is a result of foreign players divesting).
So how do we reverse this trend?
One measure that can be taken by the RBI, is to change the interest rates, so that value of the rupee is appreciated in the global market. Another thing is for RBI to sell US greenbacks in the open market, thereby getting this situation under control momentarily and stopping the spiraling downward trend.
But the best thing to happen is to hope for a bull run in the market, similar to the one we had in 2007. This will ensure that there is more foreign investment, and as a result the demand for dollar falls, and strengthens the rupee considerably.
Tuesday, September 23, 2008
Understanding Sub-Prime Mortgage
Sub-Prime Mortgage is no more a unknown word. People have started discussing it over coffee and it has suddenly become a buzz word. In the past 2 weeks I have notices at least 5 headline articles having this keyword in newspapers. So, its natural that everyone is eager to know more about the crisis which brought about the downfall of a 150 year old company. Here, I try to explain this crisis in simple "human-readable" terms.
Before dwelling into this hot issue, let me describe the current state of affairs (majorly in U.S market). We have seen that Lehman Brothers have filed for bankruptcy under Chapter 11. AIG has been taken over in a multi-billion dollar deal, to keep it afloat for god knows how long. Merryl Lynch was taken over (the deal was more like a give away price). Goldman Sachs and Morgan Stanley are no more just investment banks. Freddi Mac was brought by the US govt. And looks like many more are going under the hammer. So why is this chaos in the market. Well, to explain this I will have to start with the happenings as back as in 2001.
The US real estate industry witnessed a boom between 2001 and 2005, with property prices soaring to historic highs due to low property loans, interest rates and other factors. Some of the weaker borrowers, who were either on the verge of defaulting on their financial commitments or had already done so, owned house properties whose values had risen dramatically on paper. So lenders looking at increasing their margins were quick to spot an opportunity and lent money to such borrowers on the basis of this increase in the paper value of their homes and these loans were either used to repay the old loans or for other expenses. All was fine till the housing party crashed.
The US property bubble collapsed, and interest rates began to rise. The rising rates led to a spate of defaults by borrowers, as a result of which several US sub-prime mortgage companies had to declare bankruptcy.
The result was that the shares of lenders dealing in sub-prime mortgages took a tumble. That's not all. The effect spread to the entire financial markets because these lenders had raised monies on the basis of such loans and were now not able to pay them back. And the ripple turned into a wave, affecting a wide section of the markets, and then spread overseas.
Exact definition of sub-prime mortgage:
A sub-prime mortgage is a loan offered by a lender to a borrower with a poor credit history (meaning he has defaulted on his financial commitments in the past) against the security of his house property. Such borrowers are called sub-prime borrowers. Since the risk of default is high, these loans are offered at relatively higher interest rates compared to loans offered to people with an impeccable repayment track record. However these sub-prime mortgage loans are relatively much cheaper than completely unsecured loans to the same profile of borrowers.
How does this affect Indian market and does this slow down the Indian Growth Wagon?
The US sub-prime crisis has had a short-term impact on the Indian stock market and on credit instruments with overseas investments. Collateral damage in India was extremely limited, as Indian entities do not own structured finance instruments. In effect, all it has managed to achieve is to create panic among investors. But soon those who were too quick to shed off their shares will repent their hasty decision. Our market is strong (or as strong as before the Wall Street crash), and it is highly unlikely that a sub-prime mortgage crisis will ever happen in India, since most of the Indian population which has bad credit rates are Non-prime users. Borrowers falling in this category may have never defaulted, but have low incomes or may not have proof of such incomes. These people may have borrowed earlier, but from local moneylenders and not banks or formal institutions. This is the case even with the ridiculously high interest rates the local money lenders charge. There is a reason for this. Since lower income group people do not find the need for large capital investments, they only need to borrow to sustain their daily needs. So they would prefer small amount, short duration, no surety loans, which no banks offer. Because of this, I think there is extremely less chance that the Indian markets will fall as it did in the US for this reason. But I do think that it is time the property bubble collapsed in India too.
Before dwelling into this hot issue, let me describe the current state of affairs (majorly in U.S market). We have seen that Lehman Brothers have filed for bankruptcy under Chapter 11. AIG has been taken over in a multi-billion dollar deal, to keep it afloat for god knows how long. Merryl Lynch was taken over (the deal was more like a give away price). Goldman Sachs and Morgan Stanley are no more just investment banks. Freddi Mac was brought by the US govt. And looks like many more are going under the hammer. So why is this chaos in the market. Well, to explain this I will have to start with the happenings as back as in 2001.
The US real estate industry witnessed a boom between 2001 and 2005, with property prices soaring to historic highs due to low property loans, interest rates and other factors. Some of the weaker borrowers, who were either on the verge of defaulting on their financial commitments or had already done so, owned house properties whose values had risen dramatically on paper. So lenders looking at increasing their margins were quick to spot an opportunity and lent money to such borrowers on the basis of this increase in the paper value of their homes and these loans were either used to repay the old loans or for other expenses. All was fine till the housing party crashed.
The US property bubble collapsed, and interest rates began to rise. The rising rates led to a spate of defaults by borrowers, as a result of which several US sub-prime mortgage companies had to declare bankruptcy.
The result was that the shares of lenders dealing in sub-prime mortgages took a tumble. That's not all. The effect spread to the entire financial markets because these lenders had raised monies on the basis of such loans and were now not able to pay them back. And the ripple turned into a wave, affecting a wide section of the markets, and then spread overseas.
Exact definition of sub-prime mortgage:
A sub-prime mortgage is a loan offered by a lender to a borrower with a poor credit history (meaning he has defaulted on his financial commitments in the past) against the security of his house property. Such borrowers are called sub-prime borrowers. Since the risk of default is high, these loans are offered at relatively higher interest rates compared to loans offered to people with an impeccable repayment track record. However these sub-prime mortgage loans are relatively much cheaper than completely unsecured loans to the same profile of borrowers.
How does this affect Indian market and does this slow down the Indian Growth Wagon?
The US sub-prime crisis has had a short-term impact on the Indian stock market and on credit instruments with overseas investments. Collateral damage in India was extremely limited, as Indian entities do not own structured finance instruments. In effect, all it has managed to achieve is to create panic among investors. But soon those who were too quick to shed off their shares will repent their hasty decision. Our market is strong (or as strong as before the Wall Street crash), and it is highly unlikely that a sub-prime mortgage crisis will ever happen in India, since most of the Indian population which has bad credit rates are Non-prime users. Borrowers falling in this category may have never defaulted, but have low incomes or may not have proof of such incomes. These people may have borrowed earlier, but from local moneylenders and not banks or formal institutions. This is the case even with the ridiculously high interest rates the local money lenders charge. There is a reason for this. Since lower income group people do not find the need for large capital investments, they only need to borrow to sustain their daily needs. So they would prefer small amount, short duration, no surety loans, which no banks offer. Because of this, I think there is extremely less chance that the Indian markets will fall as it did in the US for this reason. But I do think that it is time the property bubble collapsed in India too.
Thursday, September 4, 2008
Adaptability at Workplace
Recently me and my team performed a skit on Adaptability at Workplace. An interesting idea on its own, we had to perform on this topic as it is one of the Foundational Competencies of our company. Excited by this new opportunity to show our creativity, Darshan, Padmashree and myself assembled in a small Discussion Room to script and enact this skit. The most important decision to make was the fact that we got to know about the skit just 2 DAYS in advance. We had several doubts if the time was sufficient to come up with a script, and also the dialouges. We also had doubts of our ability to come up with an innovative idea for the script. But two things probably cleared the dilemmas. We found out that this was a competition, so there was that extra motivation to participate ;). But more importantly we came across the book "WHO MOVED MY CHEESE?" by Dr. Spencer. This was the "inspiration" for our script. Let me take some time in describing this amazing book.
This is a simple book, with a huge moral. This is that kindof book we generally have in middle school as Moral Science text books. It is a simple parable book that reveals profound truths about change. It is an amusing and enlightening story of four characters who live in a 'Maze' and look for 'Cheese' to nourish them and make them happy. Two are mice named Sniff and Scurry. And two are little people' - beings the size of mice who look and act a lot like people. Their names are Hem and Haw. 'Cheese' is a metaphor for what you want to have in life - whether it's a good job, a loving relationship, money, a possession, good health, or spiritual peace of mind. And 'The Maze' is where you look for what you want - the organization you work in, or the family or community you live in. In the story, the characters are faced with unexpected change. Eventually, one of them deals with it successfully, and writes what he has learned from his experience on the maze walls. Written for all ages, this story takes less than an hour to read, but its unique insights can last for a lifetime.
We just took the basic idea from this book. We had 3 charecters in our skit
1. A person who anticipates change, keeps himself ready by being upto date in current technologies, and basically plays the role of Sniff and Scurry. This was played by Darshan.
2. A person who is dejected by change, is at first reclutant to accept the change, but later realizes it is better to overcome the fear of new and unknown, rather than rot in a place where there is no future. This person adapts to change, allbeit a little late. But finds the journey to be fruitful.
This was played by Padma and she depicted the role of Hem.
3. A person who is angry that there has been a change. Who is adamant that his environment has to change with him, and not the other way around. Is constantly brooding over the changes that have taken place, and will never come to terms with it. This was played by me, and I tried my best to depict the charecter of Haw(I always play the bad guy role ;) ).
The 'Cheese' was depicted as AWESOME PROJECTS (which everyone desires for). And the change was depicted as the project getting shelved.
The skit started with all the 3 of us playing new hires in our dream company. We go through the rigours of training, and after 2 months of hard work, we get rewarded by getting the AWESOME PROJECT. In the beginning we are all enthusiastic about it. But 5 months down the line, when we are comfortable with the project, and can handle all the situations with ease, Padma and Me start to relax. But Darshan keeps himself upto date with the current growing and 'happening' technologies. 1 year into the project, we get a disastorous news that the project has been shelved. Although all of us are disappointed over it, only Darshan decides not to brood over this, and makes some calls and gets into another project since he was upto date in the new technologies that he had voluntarily learnt. Padma is dejected, and I',m angry. We feel that we have been cheated. This is the part where we try to potray that some one has moved our cheese. But after sometime Padma realizes that its not worth waiting for the project to come up again and decides to search for new ones. But it has been a long time since she has learnt anything new, and finds it difficult in the beginning. But she decides to enjoy the learning phase, and finally lands into another great project.
The final moral that we tried to portray was "Change Happens, Anticipate Change and Adapt to change as quickly as possible. Change is inevitable, So Enjoy the change as it will happen again and again."
And needless to say, with this script and an incredible performance(sorry for being modest :D) we won the first place!
This is a simple book, with a huge moral. This is that kindof book we generally have in middle school as Moral Science text books. It is a simple parable book that reveals profound truths about change. It is an amusing and enlightening story of four characters who live in a 'Maze' and look for 'Cheese' to nourish them and make them happy. Two are mice named Sniff and Scurry. And two are little people' - beings the size of mice who look and act a lot like people. Their names are Hem and Haw. 'Cheese' is a metaphor for what you want to have in life - whether it's a good job, a loving relationship, money, a possession, good health, or spiritual peace of mind. And 'The Maze' is where you look for what you want - the organization you work in, or the family or community you live in. In the story, the characters are faced with unexpected change. Eventually, one of them deals with it successfully, and writes what he has learned from his experience on the maze walls. Written for all ages, this story takes less than an hour to read, but its unique insights can last for a lifetime.
We just took the basic idea from this book. We had 3 charecters in our skit
1. A person who anticipates change, keeps himself ready by being upto date in current technologies, and basically plays the role of Sniff and Scurry. This was played by Darshan.
2. A person who is dejected by change, is at first reclutant to accept the change, but later realizes it is better to overcome the fear of new and unknown, rather than rot in a place where there is no future. This person adapts to change, allbeit a little late. But finds the journey to be fruitful.
This was played by Padma and she depicted the role of Hem.
3. A person who is angry that there has been a change. Who is adamant that his environment has to change with him, and not the other way around. Is constantly brooding over the changes that have taken place, and will never come to terms with it. This was played by me, and I tried my best to depict the charecter of Haw(I always play the bad guy role ;) ).
The 'Cheese' was depicted as AWESOME PROJECTS (which everyone desires for). And the change was depicted as the project getting shelved.
The skit started with all the 3 of us playing new hires in our dream company. We go through the rigours of training, and after 2 months of hard work, we get rewarded by getting the AWESOME PROJECT. In the beginning we are all enthusiastic about it. But 5 months down the line, when we are comfortable with the project, and can handle all the situations with ease, Padma and Me start to relax. But Darshan keeps himself upto date with the current growing and 'happening' technologies. 1 year into the project, we get a disastorous news that the project has been shelved. Although all of us are disappointed over it, only Darshan decides not to brood over this, and makes some calls and gets into another project since he was upto date in the new technologies that he had voluntarily learnt. Padma is dejected, and I',m angry. We feel that we have been cheated. This is the part where we try to potray that some one has moved our cheese. But after sometime Padma realizes that its not worth waiting for the project to come up again and decides to search for new ones. But it has been a long time since she has learnt anything new, and finds it difficult in the beginning. But she decides to enjoy the learning phase, and finally lands into another great project.
The final moral that we tried to portray was "Change Happens, Anticipate Change and Adapt to change as quickly as possible. Change is inevitable, So Enjoy the change as it will happen again and again."
And needless to say, with this script and an incredible performance(sorry for being modest :D) we won the first place!
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