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Archive for October, 2008

The Crash of 2008

· President Bush said clients shouldn’t be concerned by all these bank
closings. If the bank is closed, you just use the ATM, he said.

· George Bush said that he is saddened to hear about the demise of Lehman
brothers… His thoughts at this time go out to their mother as losing one
son is hard but losing two is a tragedy.

· The problem with investment bank balance sheets is that on the left side
nothing is right and on the right side nothing is left.

· There are 30 billion prime numbers below 700 billion. The rest are all

· How do you define optimism? A banker who irons 5 shirts on a Sunday.

· What do you call 12 investment bankers at the bottom of the ocean? A good

· Why are all MBAs going back to school? To ask for their money back.

· For Geography students: What’s the capital of Iceland? Answer: About Three
Pounds Fifty…

· If you want to gamble, go to Las Vegas. If you want to trade in
derivatives, God bless you.

· What’s the difference between a guy who just lost everything in Vegas and
an investment banker? A tie.

· What’s the difference between a bond and a bond trader? A bond matures.

· Lehman(n) have changed their recommendation on Lehman(n) from hold to sell.

· Forty years ago I sold fifty shares of my company stock and had enough
money to purchase a brand-new 1967 Ford pickup. Last week, I checked it
out, and if I sold another fifty shares, I’d have enough money to buy a
1967 Ford pickup. So, the market has stablized.


The Man Who saw it all coming 6 years ago – Conquer The Crash-By Robert Prechter

Today, six years after its launch, the book (Conquer The Crash-By Robert Prechter) reads like a script.

Download the interview transcript here

Here are some highlights of the story Robert foretold in Conquer the Crash:

Collateralized Securities
“Banks and mortgage companies … package and re-sell … ‘securitized loans,’ and [they] have issued $6 trillion worth of them. … In a major economic downturn, this credit structure will implode.” ~ Chapter 19

Mortgage-Backed Securities
“Major financial institutions actually invest in huge packages of … mortgages, an investment that they and their clients (which may include you) will surely regret.” ~ Chapter 16

Fannie and Freddie
“Investors in these companies’ stocks and bonds will be just as surprised when the stock prices and bond ratings collapse.” ~ Chapter 25

“Banks are not just lent to the hilt, they’re past it. In a fearful market, liquidity even on these so called ‘securities’ [corporate, municipal and mortgage-backed bonds] will dry up.” … One expert advises, ‘The larger, more diversified banks at this point are the safer place to be.’ That assertion will surely be severely tested.” ~ Chapter 19

Insurance Companies
“The values of insurance company holdings, from stocks to bonds to real estate (and probably including junk bonds as well), will be falling precipitously. … As the values of most investments fall, the value of insurance companies’ portfolios will fall. … When insurance companies implode, they file for bankruptcy.” ~ Chapters 15, 24

Banking and Insurance Stocks
“We will see stocks going down 90 percent and more … [and] bank and insurance company failures.” ~ Chapter 14

“Leveraged derivatives pose one of the greatest risks to banks.” ~ Chapter 19

Real Estate
“What screams ‘bubble’ — giant, historic bubble — in real estate today is the system-wide extension of massive amounts of credit to finance property purchases. … [People] have been taking out home equity loans so they can buy stocks and TVs and cars. … This widespread practice is brewing a terrible disaster. ...

“The worst thing about real estate is its lack of liquidity during a bear market. … In time, there is a massive glut of real estate. … If you have a huge mortgage on a McMansion or condo that you cannot afford unless your current income maintains, sell it and move into something more reasonable.” ~ Chapter 16

Credit Deflation
“Usually the culprit behind [simultaneous stock and real estate] declines is a credit deflation. If there were ever a time we were poised for such a decline, it is now.” ~ Chapter 16

Political Leaders
“A leader does not control his country’s economy, but the economy mightily controls his image.” ~ Chapter 27

Short-Selling Ban
“In a bear market, bullish investors always come to believe that short sellers are ‘driving the market down.’ ... Authorities outlaw short selling.” ~ Chapter 20

Bailout Schemes
“If [governments] leap unwisely into bailout schemes, they will risk damaging the integrity of their own debt, triggering a fall in its price. Either way … deflation will put the brakes on their actions.” ~ Chapter 32

Rating Services
“Most rating services will not see it coming.” ~ Chapter 25

No other book more completely and accurately anticipated the financial turmoil unfolding today.

Year 2008 – The (Non) Essential Subprime Primer

click to download- Year 2008 – The (non ?)essential Sub Prime Primer

Cashpor Micro Credit – India’s Finest Microfinance Institution

Cashpor Micro Credit – India’s finest Microfinance Institution, Amongst the world’s best.

Cutting the clutter:

  • Cashpor Micro Credit is a profitable Microfinance Institution, headquartered in India.
  • Cashpor Micro Credit was India’s first MFI to receive an Equity Investment, from a pedigree investor i.e. Vinod Khosla (co founder  of Sun Microsystems and venture capitalist, ex KPCB). Read here
  • Cashpor works in India’s poorest ‘n most neglected areas (Read: Bihar and Uttar Pradesh) in a truly very focused manner.
  • Cashpor genuinely and only targets the poorest of the poor clients through its unique Cashpor Housing Index.
  • Cashpor voluntarily charges amongst the lowest rates of interest from its clients in India. No hidden charges, whatsoever.
  • Cashpor has a brilliantly talented management team comprising of senior bankers led the almost legendary Prof David Gibbons
  • Cashpor has never defaulted on any financial institution credit facility till date
  • Cashpor employees are extremely motivated and believe in the vision of the company, which has resulted in low attrition.
  • Above all, Cashpor is sincere, fair, transparent and ethical with all its stakeholders – Employees, Clients, Investor, Bank, Regulator and the Indian Microfinance Sector

Other Interesting Facts:

  • Cashpor is headquartered in Varanasi, One of the oldest and holiest cities of India. Varanasi was voted as amongst the top ten places to visit before something by Lonely Planet.
  • Varanasi or Banaras is the oldest living city in the world. Established in 7th century B.C., Varanasi is the holiest of the holy cities to Hindus. The sacred river Ganga (Ganges) flows towards the north here which is considered very auspicious by the Hindus. The most famous of all temples of Lord Shiva is situated here(Temple of Lord Viswanath). Varanasi is full of temples, probably thousands of temples are here. There are about 365 GHATs or places of bathing on the river Ganga.

  • These GHATs are always crowded with devotees & pilgrims, & there are hundreds of priests to help them in their sacred rights. At evening, priests perform AARTI (worship with lighted lamps) at some of the more famous GHATs, & the scene is just beyond descriptions. Thousands of people attend this AARTI ceremony, including hundreds of foreigners. With its narrow streets teeming with people as well as (sacred) bulls, Varanasi is a must for all the foreign visitors to India who want to have a glimpse of the eternal India & Indian culture.
  • Every fifth shop in Varanasi either sells Paan (Betel Leaf with a dozen filings of Indian herbs) or Milk/Milk Products
  • Certain days of the year, Thandai (Thick shake made from milk, pistachios, almonds and cashew nuts) laced with marijuana cream is consumed by devotees of Shiva (Who George Clooney refers to The God of Death, in the superb Michael Clayton)
  • Varanasi is home to the Banaras Hindu University, housed in some 1250 acres.

Recommended Foodventure: The Dhaba, near Convergys BPO, National Highway 8, Gurgaon, INDIA

There is this Dhaba (An eating house, set up on a modest budget serving value meals to travelers on the Great Indian Highways), just off the NH8, adjacent to the Convergys BPO in Gurgaon. It is situated on a piece of prime land which the owner refused to sell to India’s largest real estate co. around 3 decades back and rightfully so, as it is worth anywhere between 25-50 million american dollars now.

The Dhaba operates throught the day and night and serves breakfast (Pronounced:Brake-Fusht),lunch, dinner and fresh deep fried snacks, to feed the employees working in the nearby offices, some of which are BPO facilities and operate 3 shifts, 8 hours each (Read: 24×7). The Dhaba has been open for the past 9 years and offers a good alternative to the standard eateries in Gurgaon (who otherwise shamelessly scoop out frozen food from deep freezers, microwave it, garnish it and serve to undiscerning guests)

At the Dhaba, a minimum waiting time of 45 minutes gets you a ‘yet to be cleaned table’ which I imagine resembles a freshly dug graveyard with chicken/lamb bones strewn all over. The Chotu (waiter) quickly wipes off the bones and thrusts down glasses of water, which one should safely avoid and must insist of a bottle of packaged water.

One can order any of the 60 dishes (including 10 variants each of the Parantha and Maggi Instant Noodles) on the menu. I would recommended you order the signature parantha’s (thick organic whole-wheat pancakes with vegetable/meat stuffing, shallow fried in butter). The Parantha is large, the size of a medium Domino’s pizza and makes a complete meal. You have a choice of fillings – vegetables, shredded chicken or minced mutton. Each of these filings are mixed with secret Indian herbs and spices prior to getting thrusted into the dough before getting flattened and tossed onto the tawa (a big pan made of iron) full of heated butter. Each parantha is accompanied by a scoopful of freshly pickled assorted vegetables and a dollop of melting butter.

(Stuffed Parantha’s)

One can also order a “kaali Dal” (Organic Black Lentils, Ginger, Garlic, Chilies, Loads of secret indian organic spices and loads of Butter, boiled in a sealed earthen pot for a minimum of 24 hours) served with Tandoori Roti (flattened organic whole-wheat pancakes roasted in an earthen clay oven).)

I would suggest one orders a Pepsi cola to water down these various artery choking and cholesterol loaded gastronomical delights !

While eating, suggest you keep all your five senses fixated on the food as the place is not really very hygienic.

Post the meal, I recommend drinking a cup of coffee from the Caravan, (A rusting White Suzuki van with punctured tyres and a leaking roof, stationed near the dhaba, for over 5 years).