Starting from 2002 to 2008, the whole world showed high economic growth which was not seen ever by humanity. The governments all around the world, printed a lot of money, which lead to economic growth. Productivity increased around all economic sectors, steel and cement production increased by 3-5 folds, new infrastructure in terms of rail, roads, bridges were made. The number of cars on the roads doubled. Wages also doubled in few years time.
This money was entered through the banking system by credit expansion. Banks were lending like anything, this led to cities getting overpopulated and towns underpopulated. Lot of money printing led to rising commodity prices, real estate prices and stock prices. This was a time when speculators earned more than real hard working people. Every fifth person was speculating and every third person was a property broker in these times.
Everybody was happy to earn money, and also too see their house price inflate. Companies added extra production capacities. Most other companies speculated by buying smaller companies to increased production. This also lead to and M&A boom.
This time became a me-me-me generation for status-seekers. It was a time of new-breed of millionaire. Everybody looked intelligent in those times. Everybody had too much to make and too much to spend. Mobile phones, Internet made people believe that we are entering a new modern era which will be much better than those sci-fi movies had shown.
This was a time, when too much money was chasing too few assets. Real estate boom went on all over the world. Mortgage industry flourished. Higher home equity, and more money in the system, made people happier to worry less about the future and spend more.
Globalization got its true sense, just 20 years back when people were living and closed communities will all their relatives in the same city/village. This time people thought about World tours, living in 10 cities for a life time. One leg on Dubai, other in Singapore and third in London. Unachievable prosperity was achieved. Humanity felt proud of it. Capitalism was appreciated like never before.
It was all about Growth. Everybody business dreamed to grow 10 times. It was a time when Money was everything. Amount of optimism in everybody was unimagined. It was, as if we are going to grow forever, without ever coming back.
It was also a time of exceptional me-me-me success stories. Absolute assholes of the world, speculated to earn millions. This was a time of success stories, everyone grew their businesses n-folds. Everybody was proud of their achievements.
But in real,
Real estate and house rents were appreciating faster than the real wages. Food prices were going off the roof, because they cannot be mass produced like mobile phones, cars or textiles. Even in textiles, cotton clothes were getting expensive because cotton cannot be mass produced, but polyester can be. Especially, the poor was not even able to afford everyday food and a 25 sqft. space to sleep, but mobile phones and nice clothes, didn't made him feel like poor anymore. Poor was also proud and happy.
The situation of educated youth was even more pathetic. In 1990, we were facing problems of employing our men, now leave men, women employment rate was also high. It was impossible for the youth to afford metro cities life, without a working spouse. The real wages though rising in currency terms were actually shrinking, now two people have to work to run a household, instead of one. And i am not talking about extra luxuries, just a normal household, with a secure neighborhood, hygiene, education for the kids, and healthcare for the rest of family. Leave cars and air conditioners. Every housewife, was trying that extra arrangement for little extra money.
Businesses and people with real hard work and no speculation didn't made much. It was always about the extra arrangement ( jugad) which made businesses running.
Everybody will realize by 2011 or 2012, that our real wages are shrinking. But if you realize, it so late, you will loose a lot.
Saturday, April 25, 2009
Monday, April 20, 2009
Capitalism vs. Communism
I read some newspaper article defending Communism and saying this is the systematic collapse of Capitalism. Also, quoting the famous Marx argument that "Capitalism will produce internal tensions which will lead to its destruction".
My thought is our idea of socio-economic system is totally wrong. Let me explain.
The capitalist system, uses human greed as the building block of a system which is supposed to create prosperity for all. However, American dominance of the world tweaked the system design such that it creates prosperity for America. How much ever resources or hardworking men or capital other countries get, prosperity will always be with America. This is called American Hegemony.
Capitalism has a systematic flaw, that humanity will create so much production, and capitalism has no way to destroy excess capacity except by killing people using a war.
Communism has a systematic flaw, that humanity will not have enough motivation to create things, because benefit finally goes to the community or the society.
Whether Capitalism fails or not, but it definitely gave us a wonderful time with lots of ups and downs. I don't think that Communism was a great socio-economic system either. Communism would have failed badly and humanity could have never come close to the kind of development Capitalism could achieve.
What is the best socio-economic system, which is self sustainable, is not prone to systematic flaws ?
There comes the idea of Religion. A system above all socio-economic system, tried and tested, without systematic flaw.
When human beings feel intense heat from the sun, Capitalism suggests human beings for invention of Air Conditioners. However, Religion suggests reaching such spiritual levels in mind, that you do not feel the heat anymore. Capitalist system is materialistic, where body is cooled down when it feel the heat. Religious system are spiritualistic, by cutting of the pointer in mind which sends the sensation that body is feeling heat. I will leave it up to you to decide which one is better.
Materialism and Spiritualism are similar to idea of accessing things via value and access via pointer in C/C++ respectively. We need to fill our material desires by taking the pointer to that desire and pointing it to NULL. Instead of creating random things to fill that material desire.
Under capitalism, we have become such mother fuckers that we are fucking up our mother nature in a 6 billion people group orgy. Why do you need a dining set which defines you as a person ? Why do we need to have perfumes and watches to differentiate ourselves ? Why do you
want to roam around the world ?
We have become obsessed with these material desires to obtain such things. And after obtaining frustrated to maintain such things. After frustration, fearful of losing such things.
We have researched all the wrong things. It is time to research our minds. It is the time for the world to leave its materialism and start moving towards spirituality. This financial crisis will mark a lot of things. The crisis has just begun.
My thought is our idea of socio-economic system is totally wrong. Let me explain.
The capitalist system, uses human greed as the building block of a system which is supposed to create prosperity for all. However, American dominance of the world tweaked the system design such that it creates prosperity for America. How much ever resources or hardworking men or capital other countries get, prosperity will always be with America. This is called American Hegemony.
Capitalism has a systematic flaw, that humanity will create so much production, and capitalism has no way to destroy excess capacity except by killing people using a war.
Communism has a systematic flaw, that humanity will not have enough motivation to create things, because benefit finally goes to the community or the society.
Whether Capitalism fails or not, but it definitely gave us a wonderful time with lots of ups and downs. I don't think that Communism was a great socio-economic system either. Communism would have failed badly and humanity could have never come close to the kind of development Capitalism could achieve.
What is the best socio-economic system, which is self sustainable, is not prone to systematic flaws ?
There comes the idea of Religion. A system above all socio-economic system, tried and tested, without systematic flaw.
When human beings feel intense heat from the sun, Capitalism suggests human beings for invention of Air Conditioners. However, Religion suggests reaching such spiritual levels in mind, that you do not feel the heat anymore. Capitalist system is materialistic, where body is cooled down when it feel the heat. Religious system are spiritualistic, by cutting of the pointer in mind which sends the sensation that body is feeling heat. I will leave it up to you to decide which one is better.
Materialism and Spiritualism are similar to idea of accessing things via value and access via pointer in C/C++ respectively. We need to fill our material desires by taking the pointer to that desire and pointing it to NULL. Instead of creating random things to fill that material desire.
Under capitalism, we have become such mother fuckers that we are fucking up our mother nature in a 6 billion people group orgy. Why do you need a dining set which defines you as a person ? Why do we need to have perfumes and watches to differentiate ourselves ? Why do you
want to roam around the world ?
We have become obsessed with these material desires to obtain such things. And after obtaining frustrated to maintain such things. After frustration, fearful of losing such things.
We have researched all the wrong things. It is time to research our minds. It is the time for the world to leave its materialism and start moving towards spirituality. This financial crisis will mark a lot of things. The crisis has just begun.
Wednesday, April 8, 2009
Inflation going Hyper !!
This post explains you why inflation will go Hyper.
Assume that current monetary easing leads to mild inflation in India and China. India and China, already have a high base effect of last year. A 5-10% inflation again will lead to havoc in the economy. Initially, governments will try to control inflation by monetary tightening, but their is so much amount of money already in the system that monetary tightening is not going to work (as it was not working in May, June, July when inflation finally peaked at 13%)
Bond markets are already showing signs of a bubble bust, so governments which have screwed up their finances will find it problematic to raise money, and hence will resort to printing money.
Eventually, India and China will have to intervene in the currency markets, to prop up their currencies. This will lead to inflation in US, as dollar will lose value, when these two countries intervene directly by selling dollars out of their forex reserves. US will not like it, and will probably piss-off India and China, by ordering them not to intervene in the currency markets directly.
If, India and China, are successful in the currency markets, the inflation will be exported to US. That means, inflation has gone global. Now, all global commodities will start rising. This again leads to higher inflation in India and China.
If, India and China, are unsucessful in the currency markets, they will hyperinflate. That means, half of the world population is facing high inflation. This will make things even more worse, because it will definitely lead to a massive social unrest and a war.
I know, you did not got it all, but atleast keep 1 year of food stored at your home. Live life the old way, when people used to buy 500 kg of wheat/rice at the time of harvesting season and consume it for whole year. Also, now people have guest room, childrens room, living room, dining room but they have forgotten the significance of store room. Have a store room at your home.
Understand that we are not that modern, appreciate the old ways, for they have seen more than you to make something a part of the culture. To understand what exactly is going to happen, just imagine a 1-year curfew is taking place, and how should you be prepared. Things will get worse from as early as 2010. You still have good 9 months to think, watch, but once you are sure, take action. Watch commodity prices at your grocery store or a commodity market website, and make your own inflation index. Buy equities and gold, they will be safe and liquid heavens to preserve your wealth against rampant inflation. Buying realestate will also be good, but ill-liquidity will be a problem.
Assume that current monetary easing leads to mild inflation in India and China. India and China, already have a high base effect of last year. A 5-10% inflation again will lead to havoc in the economy. Initially, governments will try to control inflation by monetary tightening, but their is so much amount of money already in the system that monetary tightening is not going to work (as it was not working in May, June, July when inflation finally peaked at 13%)
Bond markets are already showing signs of a bubble bust, so governments which have screwed up their finances will find it problematic to raise money, and hence will resort to printing money.
Eventually, India and China will have to intervene in the currency markets, to prop up their currencies. This will lead to inflation in US, as dollar will lose value, when these two countries intervene directly by selling dollars out of their forex reserves. US will not like it, and will probably piss-off India and China, by ordering them not to intervene in the currency markets directly.
If, India and China, are successful in the currency markets, the inflation will be exported to US. That means, inflation has gone global. Now, all global commodities will start rising. This again leads to higher inflation in India and China.
If, India and China, are unsucessful in the currency markets, they will hyperinflate. That means, half of the world population is facing high inflation. This will make things even more worse, because it will definitely lead to a massive social unrest and a war.
I know, you did not got it all, but atleast keep 1 year of food stored at your home. Live life the old way, when people used to buy 500 kg of wheat/rice at the time of harvesting season and consume it for whole year. Also, now people have guest room, childrens room, living room, dining room but they have forgotten the significance of store room. Have a store room at your home.
Understand that we are not that modern, appreciate the old ways, for they have seen more than you to make something a part of the culture. To understand what exactly is going to happen, just imagine a 1-year curfew is taking place, and how should you be prepared. Things will get worse from as early as 2010. You still have good 9 months to think, watch, but once you are sure, take action. Watch commodity prices at your grocery store or a commodity market website, and make your own inflation index. Buy equities and gold, they will be safe and liquid heavens to preserve your wealth against rampant inflation. Buying realestate will also be good, but ill-liquidity will be a problem.
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