Sunday, September 28, 2008

World financial crisis and its impact-A.K.Prabhakar

Are bad times here to stay in 2008?

3more months to end the year and Global financial crisis seeing no end we have September 30, Tuesday, which is the deadline for hedge fund investors to put in requests to get their money back by year’s end 90day notice period. The redemption requests have been pouring into hedge funds well ahead of the Sept. 30 deadline. More pressure can be seen in the last few days, hedge funds, control nearly $2 trillion in assets and indication are that 10% of w
ithdrawal can be seen.

Read more here.... Look Out for Bloody Tuesday

Will the $700billion package save the crisis?

This can be a temporary relief and never a permanent solution many times I get a feeling if U.S has turned into socialist and using good money to buy bad asset to save mismanaged corporate, instead of allowing them to die natural death. I have attached a file which says 1,479 FDIC member banks are at risk of failure with total assets of $2.4 trillion. So we are no way near to solution. , the sixth-largest U.S. bank by assets, hunts for a merger partner – reports. The bank suffered a record $9.11 billion loss in the second quarter.
Read more here...Final bailout

Will India face the same problem?

India has a better system of banking and with majority of banks being PSU where Govt hold more than 50% stake we don’t have a problem. India is a better regulated market in terms of Banking and NBFC as RBI norms are strict and regular monitoring and stricter NPA norms are followed, recently also RBI warned KOTAKBANK to reduce equity market exposure as it exceeded the limits prescribed.

Special mention:

Ex-RBI Governor Y.V.Reddy was very smart enough to check asset bubble by hiking interest rate and reducing liquidity into the system and it did effect growth but he was strong to say I would compromise growth to control inflation. And warned Govt that real crude prices were not reflected in inflation so first correct that in response to FM statement to cut interest rate. When Fed was cutting rates he stood his way with higher rate and tighter liquidity.

Recap: Market summary for April 7th 2008-A.K.Prabhakar (for use of ANANDRATHI)

Market always discounts bad & good news at faster pace maybe a layman can be laggard, Inflation worry was there for almost 1years and RBI governor refused to bow down to political pressure to cut interest rate when FM wanted to reduce interest rate to improve growth, the same man (FM) now says we compromise growth for inflation. And the mess which has been created by political bosses for there whims and fancy has impacted us now. Good thing about political stupidity is they can’t face midterm election now and hard fight over inflation will happen. The art of living lies not in eliminating but in growing with troubles, growth doesn’t come without inflation but we need some visionary moves to control inflation and stimulate growth at the same time. If someone were to watch the moves of China they are accumulating oil wealth for long time and the reforms are faster and timely compared with any countries in the world. As Sitaram Yechury pointed out after visiting china, China is putting there hand on left and turning (doing everything) Right’.

Remember: The bigger the boom generated by manipulation of money and credit, the bigger the ultimate bust.

Read more here....Economy in Trouble, No Matter Bailout Outcome

Opinion: Bad times never last, but time is the best cure for any problem maybe by February or March 2009 market can show a bottom and enter a consolidated phase before an up move and I doubt a new high for next 3years but come 2009 good time for stock market starts and wise investment would give best returns.


Lehman Brothers Holdings Inc

The 158-year-old firm was founded by brothers Henry, Emanuel and Mayer Lehman, Jewish immigrants to the US from Germany, in 1850. Henry set up a general store in Alabama in 1844 and was later joined by his brothers. In 1850 they set up the merchant bank in New York after having made money in railway bonds. Lehman Bros, which till June 2008 had not reported a quarterly loss even once, had earlier survived many an economic crises, like railroad bankruptcies of the 1900s, the Great Depression in the 1930s, and the collapse of Long-Term Capital Management in the 1990s.


A.K. Prabhakar


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