Gold Economy

Have you ever wondered why the gold prices, at their all time highs, are still rising? Perhaps some people have a clue.

Last November, in a majestic, colonial style corner office in Fort, Mumbai, I met a visionary and an infectious investment officer of a large investment company. His whole office set-up, with large pillars of books and sheaths of notes reminded me of ‘John Nash’ as in the movie - ‘A Beautiful Mind’. The company runs on Berkshire Hathway model and we discussed at length the apparent reasons for the collapse of the Global Economy. Of course the reasons came out to be relative inadequacy of the valuation models to model out scenarios of liquidity squeeze or any similar real-time event; the models on which the entire spreadsheet generation and the Wall Street relied upon.

The person explained the fall-out. The current situation is worse than the 1930s recession. During the 1930s, the countries tried to reduce ‘balance of payments’ deficit by devaluing their currency (this caused increased competitiveness through cheaper exports). This was fine from a country’s perspective as a short-time panacea; however, it eventually resulted in decrease in demand, decrease in national incomes and high unemployment. This also resulted in lesser foreign investment and reduced international flow of capital.

During the lasting part of the World War II, in order to build and regulate an international monetary order, an obligation was reached among ‘Allied’ nations to maintain the exchange rate of their currency within a fixed value—plus or minus one percent—in terms of gold and the ability of the International Monetary Fund (IMF – formed at that time) to bridge temporary imbalances of payments. In the face of increasing financial strain, the system collapsed in 1971, after the US unilaterally terminated convertibility of the dollars to gold. This action caused considerable financial stress in the world economy and created the unique situation whereby the US dollar became the ‘reserve currency’ for the states which had signed the agreement. (Source – Wikipedia)

What Lies Ahead. With its ‘War on Terrorism’ and ‘Stimulus Packages’, the US will run fiscal deficit for years to come. The Corporate failures mean that the trust on American Philosophy of Business is fast depleting and US Inc may struggle for investments. Where is this money then going to come from? Will China be able to buy up the treasury bonds? Perhaps No, the excesses have been far too much and failures span globally. The people will increasingly realize that US Dollar is a far weaker currency. What more, they will realize that even the EUR or the Yuan is no stronger (due to their own economic situation and corporate performance). The failure of currency markets is imminent, more because of lack of trust rather than lack of value. Gold will again be accepted as a universal mode of exchange. India, because of its infatuation to Gold will be the first country to come out of this very dangerous situation.

So, when is this going to happen? The person said 3-4 years. I have been pessimist of the world economy since June last year (visit my previous blogs), but this takes the evaluation to an entirely new level of pessimism. We met for half an hour or so but the impact was everlasting. I have promised to meet him when the world moves to Gold Standard. I hope I never meet him.

Federer - Now more far from greatness

A resplendent ‘Camel’ geometry box complete with a ‘divider’, a ‘compass’ and all sorts of HB pencils was the 1st Prize a person used to get in the New Green Fields School, where I studied from Class II to Class VI. I never managed to get that elusive geometry box. I had to be content with color pencils, awarded to the second position holder. I kept on accumulating these pencils over the years. I fought a losing battle against an invariable 1st ranker for a couple of years and then gave in. It was because, rather than trusting my abilities, I began trusting the 1st ranker’s ability to overwhelm me.

I understand what it’s to be ‘second’; that too often; more so against the same competitor. On-stage break-down of Federer, who seldom displays his emotions, reflects what Nadal has done to his arch rival. Federer is mentally disintegrated and psyched out. His outburst reflects his nightmare of time and again facing and losing to Nadal during his continual chase towards 14th and record equaling Grand Slam title.

Federer is giving in. 22 years old Rafa with 6 Grand Slam title will close in and who knows will be the greatest player ever; provided the hunger lingers on and he keeps himself away from injuries.

I feel that after this match Federer is all the more far from greatness than he ever was. The King of Clay, Nadal, will hardly give a chance to Federer in French Open. Wimbledon may be the only hope as its Federer’s favorite surface - I am doubtful though. Let’s see how Champion Federer copes up with more distant tryst with greatness; for greatness is achieved and not begged; neither gifted.

P.S. – Nadal displayed a great sense of honor for his rival; not only in words but in action. His proprietary ‘bite’ on the trophy was missing; an irksome pose for Federer’ fans and to Federer himself.

My Bet is on Nadal

Hey - It's again a Federer Nadal Final and tennis can not get better than this in the open era. The much anticipated final takes place this Sunday and I am sure Rod Laver Arena is expecting a far greater spectacle than the Nadal Verdasco match.

Federer will try to achieve Sampras' feat of 14 grandslam title and my heart will cheer for him to lift the trophy for the fourth time. However, my bet is on Nadal as his confidence will be sky-high after winning an evenly contested five setter; longest match in the history of the tournament. Nadal has time and again displayed that extra instinct that comes into play when he plays Federer.

Good Luck Federer - Less Fed Error this time please

India Sri Lanka Series Prediction

My guess is that India will loose this series 2-3. Why? Anybody's guess...

1. India is out of match practice
2. Harbhajan is not playing and
3. Menids Factor still needs to be sorted.

Let's see. Last prediction of India winning series against Australia 2-1 went in the right direction; only the margin was bit better.

Sachin's records are everlasting

Reading the morning newspapers today, I am overwhelmed by the thoughts of how fortunate we all have been to have witnessed a phenomenon called ‘Tendulkar’. Following his exploits all across the globe had been a national pastime and I am no different. From the teenage to adulthood (of mine and India), he has been the only CONSTANT.

Having amassed 12K+ Test Runs and 16K+ One Day Runs, Tendulkar sits comfortably at the summit. Can anyone better him?

My Guess - Ponting will end tantalizing close to Tendulkar; and given the Australian obstinacy, the Test Match pecking order for the most test runs will be Ponting, Sachin and Graeme Smith. Let’s look at the factsheet:

Ponting at 33, is ~1800 runs behind Tendulkar. Give him 4 years of Test Cricket. At 15 innings a year, he may end-up at 3,500 runs more to the current score. This will take him to ~13,700 runs (he may play a few more matches for the 14,000 club).

Tendulkar at 35, may play for 2 more years yielding another 1600-1700 runs. He may end his career at ~13,700. Setting a close target for Ponting.

Graeme Smith at 27, is close to 6000 runs, has good 8 years of cricket left with him and has an average of ~50 runs per innings. This should take him to the 12,000 runs club.

The shape of cricket in the next decade will be a changed one with round the year cricket, more of league cricket, less of test matches etc. For instance, with this India tour, Australia faces 21 months of non-stop cricket, with 26 tests, upto 59 ODIs, 16 Twenty20, 30 IPL Twenty20 and 12 Champions League Twenty20 (courtesy Malcolm Conn). Shortened Cricket Life Span will make sure that either Ponting or Tendulkar will reign the summit forever.

On the One-Day front, Sachin is way beyond his contemporaries (Ponting is 5,000 runs behind). It is only obvious that Sachin’s maximum runs record in ODIs will never be broken, unless there comes a toddler as gifted as Sachin; assuming the shape of cricket remains the same for the next 20 years.

Away from the record books, I promise I will continue to do the following top ten activities:

1) Be in awe with the exploits of this Little Champion (ever wondered why Gavaskar calls Sachin by this nickname? Simple – he wants himself to be called Little Master)
2) Remain nervous for that 1st run, every time Sachin starts his innings.
3) Wanting a century every time he comes out to bat
4) Abusing every time he misses an opportunity
5) Cursing the umpire when ever he wrongly gives Tendulkar out
6) Praying for his success every time he is on those 22 yards
7) Urge selectors to be prudent and drop Sachin, every time he fails
8) Wanting Twenty20 to have come early in our (Tendulkar’s) life. He would have paens written all over in that version as well
9) Wanting Ponting to fail every time he comes out to bat
10) Wanting to see him Live In Action at least once, before he hangs-up his boots

7th April, 1998 ODI in Kanpur was the closest I have come to watch Tendulkar LIVE. Preparing in my mind; the unique slogans, we waited all night for our friend Tyagi to arrange for 8 tickets. He could arrange only 3 tickets and I dropped the idea to watch the match from the Green Park stadium for the sake of our team (as Tendulkar has done all his life). I planned to travel that day from Lucknow to Delhi in the rickety state bus. The other day I heard, he hit 7 sixes in the match. Pity Me!

Manoj, one of my batchmates, is a fanatic Tendulkar fan. He never lost hope when even Tendulkar had lost hope. I distinctly remember the late night Sahara Cup matches, when he would sit lonely in the TV room of the college, praying for that elusive miracle for an Indian win; some times Tendulkar helped, most of the time he didn’t – still Manoj kept seated and kept praying. Yesterday, when Tendulkar climbed the summit, he became the proud father of a baby girl. What a coincidence! Welcome New Generation! You have massive boots to fill in – as a player and as a SPECTATOR, for there will seldom be such a fine talent.

Prediction: India-Australia Cricket Series 2008

I think India will win this series 2-1. Lets see

Why this blog?

Time and again, all of us have a view of things happening in a particular way in the future. The view can be based on sound reasoning, uninterupted logic, balanced judgement or pure intuition. So why not, tell it to others and keep a prediction/intuition score. You need not do anything but provide a prediction on an event with a timeline. I will keep tab of scores and keep publishing weekly.
The topics can be varied - cricket, bollywood, stock market, politics, weather, product, relationships, investments etc. etc.
So keep feelingintuitive and don't forget to leave comments. They are all counting. Lets see who is the best.