Sports and Politics

Interesting to note that the Indian Prime Minister invited Pakistan's Prime Minister to witness the match at Mohali being played between India and Pakistan in a World Cup Semi Final clash. The two nations severed the cricket ties after Mumbai attacks and sport suffered. Cricket has played a major role in bringing the two nations together once again. The two nations at loggerheads on the Kashmir issue since 1947, two wars, several terror attacks, mixed diplomacy, etc have all been a part and parcel of history. Hope the two nations realize that this can go beyond Cricket and there is a huge opportunity for both nations to bury the past and wake up to realities on a new day, start from the scratch and at least give it a try. India has meanwhile marched away into an economic boom leaving behind Pakistan in a complete wretch to deal with mind boggling level of poverty, illiteracy, fanatic extremism, hatred etc etc. It is to India's advantage to allow Pakistan develop alongside for its own long term stability in the region, will allow cut back of defense expenditure and focus on development oriented spending that can generate employment. Meanwhile Pakistan needs to start rebuilding and needs to give some serious thought on how to make a decent start.

Market Behavior

The stock markets have been very volatile in the past few days and that can be noticed by movements in the volatility index (VIX) in the past few weeks. A state of confusion prevails as we start the day, if we wake up hearing that Europe had a reasonably good day and Euro gained strength, the futures start rising. All of us know that market news has significant influence on its behavior. However the impact of market news should not be that significant that it becomes the most influential factor as economists, analysts are all working in the normal course and markets are expected to bake in the good or bad news in its pricing as it moves along with the exception of the unexpected news such as the oil spill or an unexpected disaster like the World Trade Center attacks caused by terrorism etc.
Going a step further we are now lead to believe that the economists and analysts are unable to make a reasonable assessment of the state of the union or economy and the fundamentals are subject to higher levels of volatility causing the market to react just for the day or a short period and not looking beyond. This in itself creates volatility. It is for lack of a better word the "Inability" to make reasonable assessment of the future trends that is causing volatility.
It is important for the world leaders to interact and work together as a team to enforce stability and Governments have to support each other to the extent that the world economy does not suffer as the consequences are far reaching and if the US has a cold, India and China may get the flu, has anyone ever imagined what will happen to China if the US decides to no longer import any goods from China? It is a possibility although not a healthy option for both countries. Similarly the European crisis is not restricted to just Europe and can have its consequences go far beyond. The earlier we get this World union the better it is for the future.

What Next?

With the financial markets in a state of confusion for the past two weeks, what is in store for investors? Investors have been left wondering as to how they should grow their wealth. The traditional forms of investment are not working. The mantra of stocks/bonds mix is proving to be a disaster. Underlying all of this is "Correction". Markets were over heated in the period 2000-2010. In reality an economy is expected to grow in the range of 2%-5% with an inflation rate of about 2%. Markets have deviated way off from the economic fundamentals. Investors got lured in the rising stock markets based on anticipation and expectations that are completely unreal and not based on fundamental growth rates. The mismatch will seek correction and also instill volatility as there is panic and confusion. Also adding to this confusion is the inability to assess the damage likely to be forthcoming from the European economic woes.

In this state of confusion, an average investor is better off creating a portfolio mix that has some % allocated to precious metals like Gold. Invest into growing countries like India, Brazil and China. Stay away from Europe for some time until confusion resolves.

Survival of the fittest

One would normally assume that a corporation is run by a leadership team under the leadership and guidance of its CEO. What does a corporation do if that very fundamental is challenged and it has to fight for its survival after it is exposed to a scandal? One such company that comes to mind in the recent past is "Satyam Computers" whose CEO and its CFO are behind bars, the leadership team disappeared days after exposure of the worst corporate scandals of India. The company continued to operate with the help of its middle management and lower tier. Kudos to the teams that made this company operate with no top management or directives. Today the company is experiencing an astonishing turnaround under its new management and leadership team and has found its way back.
This only goes to prove that if fundamentals of a business are strong and the people operating in the mid tier and the lower tier are qualified professionals, the company can survive through a Tsunami.

End of a golden era

The United States of America is reeling under pressure to maintain it's glory which now seems like old times. The economy including financial markets have literally crumbled in the past few months. We have seen trillions of dollars erode away from markets.
The question one has to pose is that is this consumer nervousness or has the economy peaked? One cannot ignore the negative market news every day of the week.
America is now faced with some fundamental challenges in the wake of recession, unemployment rates at a 26 year high, crumbled financial markets, credit squeeze and liquidity issues, falling demand for it's auto industry, high standard of living and the list goes on and on.
In between all of these crisis, the economic downfall lends itself to a question whether the principles of free markets and capitalism can thrive. Day after day we hear cases for regulation and government intervention through bail out packages.
In the midst of this, one has to seriously ask a question as to where is the country heading to and is this the end of a golden era for America? Indeed if this is so, the country has to accept reality with a pinch of salt and go back to basics. Going back to basics really does not mean manufacturing more of the junk american cars that market does not want. It really means addressing issues from a grass root level such as education, health care, rebuilding of infrastructure, maintainence of bridges and other infrastructural facilities, create employment opportunities, reskill people with a different set of objectives as the jobs that have been exported to India or China will not return back to the USA.
Not to forget that the dysfunctional compensation patterns in the corporate world are not helping the case either. This brings up another question as to whether the country is ready for redistribution of wealth? lowering of standard of living to become more competitive and rekindle manufacturing. Are there trade measures that can be taken to bring a balance by raising prices on certain exports to balance rising costs of imports?
America needs to address these issues quickly if it intends to continue to be a dominant player in the world markets and meanwhile countries like China and India are more likely to steal the show as things stand.
Welcome to the club Mr. Obama, reality is different to election speeches and campain rhetoric.
Come up with solutions rather than with problems.

India-Pakistan Mind Games

I am not sure as to who is playing mind games here. About 200 innocent people were killed. Many innocent people were also killed in the Kabul blast. The world does not need any more patience with Pakistan I suppose. The Indian government seems to be on the defensive when they really need to be on the offensive. Forget about upcoming elections, forget about personality clashes, forget about religious differences, it is really about innocent people who died. Assume for a second if it was your immediate relative, How would one feel?
Bottomline, India needs to retaliate and do this quickly and there is no need to issue press statements. Get moving!!!

Indian Response

Now that the targets have been secured and terrorists either killed or captured, the question is how does India respond?
If Pakistan is involved as being suggested by India, why not bring it out in the open? I am surprised to note that Pakistan;s authorities keep denying their involvement and Indian authorities keep silent.
Why link Kashmir tensions with Mumbai terror attack? These are unconnected issues for now.
I believe the jury is out in the open and if Pakistan is really not involved then they should have no issues with fighting the militants together with India. Both countries know where these guys are operating from.
Hopefully India and Pakistan unite and really fight this to the end.