“Where else will the money go?”
“I’m so stunned by my prosperity that my happiness has begun to make me anxious” -urdu
Hot investment trend 1970 – US company’s stock ; 1980 – oil ; 1990 – japan ; 2000 – silicon valley
russia’s annual avg income grew from 1.5k to 13k$ in course of decade
Goldilock’s economy – High Growth and low Inflation. Spend wisely on education, communication and transportation to raise productivity
Lesson from history – mexican peso crisis, Russian Crisis, Asian Crisis
Grow slow in rich nation, they will buy less from export driven economy – cycle
County = upper middle class level when per capita income > 4K$
india – $1400 per capital income Russia – 13k
Poor nation – easy high growth richer country – tougher growth
Eg china – 6 trillion, to grow at 10%, it needs to expand by 600 billion, 30% global market
saturation attained due to borrowing and exhange of tech over. this is called middle income trap
china going through “Lewis turning point” where most underemployed farmers have already left the farm.
Mao child policy, later one child policy
Last train home china train crisis during holidays season
House deed given in china
NO billionair in china above 10Bilion $ while 11 in russia
Hig corruptio level in china
China philosophy – Ousiders see no & hear no downside
In 1977, deng replaced Mao
1989 – Tiananmen square protest
Stats says Democracy states – high growth nation exception of authorian state – sing, South korea, china and taiwan
for every china, there is vietnam
More rolls Royse sold in china than britain
Loius Vuitton – 17 stores in china
China GR compared to movie Speed
Stagnation problem occured in Japan
Chinese proverb “A dead camel is still larger than a horse”
Great Indian Rope Trick
Indian market is dependent on global market
India > 5000 listed company
UP – worlds’s 6th populous country
WB population > Germany
ManMohan Singh referred as US president CalvinCoolidge (Allas Silent Cal)
India similar to Brazil – colorful , noisy, quick to make promise that cannot be relied,casual meetings, family oriented
words often short flowery and vague while apologies long
welcome to indian wedding
MGNREGA 100 DAYS Employment cost india 10Billion every year
Robber barons of america ??
88/178 corruption rank’
land acquisition – joke on the movie song
No. Of billionaires in Russia =100; India =55 China =115; observe how these billionairs make money – you will know a lot about the economy.
US Anti Trust Law??
India = United States of Europe (festivals etc)
God is brazilian
brazillian currency, Real one of the most expensive currency against dollar
AIn brazil/Sao Paula – items/property/movie tickets/haircut expensive than the most expensive city
brazil leading exporter of raw material and china it’s leading importer
less money spent on infra in brazil
before 1994 , brazil’s currency changed 5 times. Hyper inflation exists, it is tackling it by high interest rates.
Hammerin hole game – If you try to hit on head, anothe rhead will pop up hence one problem solving leads to another problem
As goes America, goes Mexico. Mexico Economy heavily dependent on american Economy. peso (currency) is also cheap
Mexico little borrowing and dominated by obligopolists; high exodus rate
RUSSIA :- In russia, there’s Room only at the top
Freq power outages
they say money talks and wealth whispers but In moscow, money dances on the bar – highest prosti,wild parties etc etc
No infrasturcture investmanent (20%), worst (old) airport and old roads
Putin – good measures – cut down debts;yet less foreign investment; oil dependent; 27 nobel prize winners are russian
No top 5 vodka selling company is russian
magnit- mega store in russia
ruble (currency) devalues twice 1991 &1998
EUROPE – The Sweet spot
budapest & Dubrovnik – beautiful places to visit but not to invest
Poland (education) & Cezch (post communist era , velvet revolution) – debt free, stable banking and financial institution
Hungary – Huge debt due to government bad policies
Erdogan , PM ; AKP party , good orator- huge base suport; longest serving leader in modern turkey
bridge between europe and asia
Turkey crisis in 2001; bailout byIMF for >20$ billion
Stability achieved as inflation low; huge infrastructure inv; high speed train; Canal instanbul
Trying to get EU membership; taming inflation and attracting Foreign inv
FDI – archille’s heal for Turkey
currency – Lira
High import of industrial commodity- oil, copper
France and germany hostile to turkish EU membership
Borsporous – night club partying scene, women smoking and indescent dress; strange for a muslim country; Cop incidence
Sin tax on goods banned by islam (spirits/liquor); – huge source of income
egypt – suez canal; no natural resources but startegic geo position
Indonesia – jakarta – Suharto regime overthrown after 32 years of rule in 1998
thai currency – baht; indonesia – rupiah
1998 Asian crisis occured due to fall in price of baht; huge south east asian bank borrowing from abroad; when stocks fell, locals flew without paying
Indonesia – SBY president. Easy to open plan due to easy corruption; bribes collected locally, spend locally – good for economy
Philliphines – Manilla – decline due to political instability; old Jeepneys- public transport mode
Aquino new president – won due to public sympathy after her mother death
bad manilla airport – worst
Filipinos major people abroad as maid/middle jobs
Phili – Business process outsider; competition to india
Thailand – Bangkok ; political instable yellow shirt v/s red shirt
Yingluck Shinawatra – won in 2011 by major victory; sister of thaksin Shinawatra
Export boom ; badly hit by 2008 recession
what goes up, comes down
Groom’s family have to pay dowry to the bride in thailand;
High majority of working women but less impact on economy as they take low wage/ temporary jobs
Malaysia – kaula lumper
huge govt spending; high commodity prices; export of palm oil and rubber tree;
competition from tiny singapore
maly against chinese business class
Truth – First to flee are mostly well connected well positioned insiders. Tracking necessary
when financial crisis looms , money fless in 3 phases – 1. large local investors thru underground/back channels 2. foregin creditors 3. foreign investors in local stock market (easy to track and blamed)
Eg of back channels – company under report exports and over report imports as cover up
Singapore modernization done by vision of lee Kuan yew in 1960’s; post british colony ; malaysia tie failed;
South Korea (SEOUL) –
when need to check pulse of global economy, I look for vital signs at seoul stock index – KOPSI aka dr. Kopsi
south korea and taiwan – former japan colony. adopted japan model on spending on R&D
hyundai, world leader
Stock mareket – KOSPI, japna’s Nikkei
SKorea – germany of asia – high manuf units
Samsung, LG and Hyundai =16% GDP
Hyundia – 10 years warranty
Family business with public stock and efficiency
Warren buffet “Family bus. is good until they don’t start fighting”
Taiwan – entrepreneur ; Skorea – happy to work in orga
Both under japan ruled for ages. Taiwan – happy ; Skorea – against
Authorian business – easy decision.
Skorea – open for investment but it is not open for outsiders to work in org.
Skorea started inv in global images, taiwan happy to make IT goods- laptop spare parts etc for dell and HP
china wants divided Korea
Skoreas against Japan, aim to beat japan
Japan happy in their own world. taiwan dependent on japan for techn
Manufacturing export 31% main part of GDP (germany of Asia)
In 98 Asain crisis, SK 40% comapnies went under and it took loan of 58Billion from IMF – huge humiliation led to national mobilization and more hardwork where people gave gold to pay off loans
Hyundia took a big gamble by entering USA market in 1986, it was a joke for many years as it fail but in 98, it offer 10y warranty which was a very bold move and won its’s skeptic over quality and 2005 it open it’s first plant in US in Alabama
South Korea has mainly family run companies and it proves that family own bussiness is good as it gives more authority. Family keeps view on long term goal while for day -to day op hires experts.
Warren buffer responded “family bussiness are great until the families start fighting’
SK wants to beat japanese in every game – big rivalry
South korea leader in ship building (Top 3 world ship buidling companies are south korean)
Taiwan has entreprenuership culture which is a disadvantage as employees leaves to start rival company as no big corporation.
SK has blindness for service hence less 5 star hotels
North koreas close to china has it always want korean peninsula to remain divided.
South Africa: African National Congress ANS enjoying long honeymoon since it is in power from 2 decades and showing very less economic boom (3%). People still remember how ANS removed apartheid.
SA has done its basic right by controlling gov debt and inflation but failed to create dynamic competition in politics or economy.
SA suffers from ‘Dutch Disease’ which induces a resource rich nation to suffer from its own riches. Eg: when price of gold increases, union workers of gold mines demand higher profit share. but wages are rising faster than inflation & productivity.
(gold companies get punished due to gold price rise as labour cost increases)
SA politics referred as ‘cappuccino economy’ with white cream over a large black mass, sprinkled with black chocolate on top’
Debt is rising in SA due to economic boom people borrowed lot of money while unemplyment remains still high
56% of SA companies earn from developed countries
80% African trade is commodities like oil and precious metals
Fouth nation stock market works on insider trading and connection. It is a saying you don’t have to look at the number crunching but data but keep your ear closer to wall.
They always rely on rumour. Eg- Sheikh of dubai during dubai bubble burst in 2008 told investores about the crisis days before it became public.
Ukraine stock market is a joke as it has more than 500 listed companies as it force compaines to list. hence companies started floating a small share call free float hence they donot held them responsible to any investors.
Iran, Iraq & Syria are still closed economy. Nigeria stock market close due to technical glitch in 2008 which led to drop in stock to 76%.
Turtle tactic- sit on chair rather than sofa incase of explosion chair can be used as armor. Also in Nigeria people kidnap using name holder in airport, hence check the actual picture.
Srilanka Peace dividend – Absence of conflict can unleash growth in these countries.
Sinhalese v/s Tamil. Under british empire, minority tamilians prosper as they held top governemnt jobs and were rich
In 1948 – independence came and Sinhalese started providing subsidies and more public jobs to their own people (Sinhalese). Hence in 1977, LTTE (Liberation tigers of Tamil Eelam_) was formed which used child soldiers and suicide bombers.
in 2009m in closed seize out, Vellupillai Prabhakaran was killed along with thousands civilians.
Acc to US agency of International Dev, after any conflict ends, growth typically rebounds at a below average rate in first 4 years and above avg ratr after 5 years.
China investing heavily in Srilanka hence India is trying to strike a trade balance with Srilanka
“The later a nation develops, the more opportunity it has to learn from nations that came before, and to leapfrog entire development steps in the process.
Nigeria under hands of ‘good luck Jonathan’
There is lot of oil and movie industry, Nollywood (2nd largest producer of films behind India)
Acute power failure problem. Also high cost of doing business as poor infrastructure such as road, rail and public transport.
Currently no official ID proof in the country leading to lot of scams.
GULF – A world unto itself.
No taxes in gulf. Main source of income oil and gas (black gold)
cost of gas = 3% of UK
Saudi spends 10% of its GDP in subsidies on electricity, fuel and gas as giving subsidies is better than building infra. Also subsidies goes into foreign pockets.
Saudi is the largest crude oil producer but most of refineries are foreign and it is dependent on west for finished fuel.
To avoid arab spring, monarchs of arab are sharing more oil profits through increasing pension pay, wage hike and new housing.
Arab doesn’t have plan B to sustain funding of its subsidies if oil prices fall.
Guld has limited progress in putting its citizen to work, maily all companies are run by consultant. Typically CEO will be royal family but below will be Indians, British and Americans running the company.
Affter the ecstasy, the laundry. – buddhist monk phrase
“those who leave early may be saved but the music and the wine are so seductive that we donot want to leave but we do ask, what time is it? what time is it? only none of the clocks have any hands. – The MONEY GAME
Next burst will be commodity burst.
rising oil prices is risky as they stall economy and puts more pressure on the poor population.
When investors are feeling confident, they pile into all these assests all at once, and when confidence ebbs, they pull out at once.
Antoine LAvoiser, father of modern chemistry said ” nothing is lost,nothing is created, everything is transformed”. Hence countries suchas China will transform as per time
Software higher profits than hardware. Eg -Apple employs 50k & its stock increases while taiwan makes apple phone, employs millions yet stock dec.
The Third Coming.If there is no wind, row
George orwell “whoever is winning at the moment will always seem to be invincible”
When asked why evil exits, indian saint ramakrishnan answered “to thicken the plot”, same goes for recession.They add dramatic tensions, imposes pains but also reforms and restructuring.
The worst case scenario, however is not the countries that accept no pain when they reach bottom but those that take no risks on the way up.
India will grow if more billinaires are formed in productive industries such as technology rather than politically connected sectors like mine and real estate.