Lot of us in this world are facing the brunt of recession in some way or the other.But little did we know that it was predicted by Peter Schiff, an American Economic Commentator way back in 2006.The more interesting fact is that the accuracy with which he predicted things.
The link to his prediction is this video:
http://www.youtube.com/watch?v=2I0QN-FYkpw
Few interesting things he mentioned in the video are:
2006 comment : The basic problem of the US Economy, is that we have too much consumption and borrowing, and not enough production and saving. We should not resist the recession, but embrace it, because the disease is all this debt finance consumption. The cure is, that we stop consuming, and start saving, and producing again, and that’s a recession. And sometimes, medicine tastes bad, but you have to swallow it!
2007 comment : The sub prime type crisis is going to unfold in other places such as bonds backed by auto loans, credit card debt, and that’s going to pull the rug out from under the consumer. Not only can he not borrow money to buy a house, he can’t borrow money to buy a car, he can’t use his credit card
Critics said during that time:
"The Central Banks have not yet fired their big guns, they will fire them when necessary, the worst is over."
Now the critic comments seems humorous..isn't it
Friday, June 26, 2009
Education sector Update
To boost its presence in the Indian education sector, Pearson, a Britain-headquartered education and information company is investing $30 million in Indian education resource provider Educomp Solutions and Bangalore-based online tutorial firm TutorVista.Pearson will acquire 50 percent stake in Educomp Solutions for $17.5 million as part of their agreement signed Wednesday. The unit will then be converted into a 50-50 joint venture.
'The focus of the government is not just employment but employability, so there will be a lot of focus on skill-based knowledge,' Vivek Govil, president and chief executive of Pearson Education
The Indian government spends $30 billion a year on the education sector, while Indian consumers spend $50 billion a year on private educational institutions and services, so it makes a huge business proposition
TutorVista has already received funding from Manipal Educational and Medical Group and private equity fund LightSpeed Venture Partners
'The focus of the government is not just employment but employability, so there will be a lot of focus on skill-based knowledge,' Vivek Govil, president and chief executive of Pearson Education
The Indian government spends $30 billion a year on the education sector, while Indian consumers spend $50 billion a year on private educational institutions and services, so it makes a huge business proposition
TutorVista has already received funding from Manipal Educational and Medical Group and private equity fund LightSpeed Venture Partners
Nifty-Now freely floating
From today the National Stock Exchange (NSE) will compute its benchmark Nifty, CNX 100 using the free-float market capitalisation methodology. The weightage will go up for some stocks like ICICI Bank, L&T, Infosys, HDFC, HDFC Bank. But some of the stocks which could get impacted are stocks like ONGC where the weight will come down from around 8.5% to nearly 3.17% that’s reduction of nearly 4.6% in ONGC.
Sector specific - Power, oil and gas, telecom these will be the sectors where we will be seeing reduction in weightage and it will be the banking pack which will gain the most because the weight will go up significantly from around 11.8% to 18.2%. But we need to breakdown the banking sector into the public sector banks and the private sector banks. The public sector banks weight will remain same from around 4.5% to the same around 4.5% but private banks – the weight will go up from 6.2% to 12.3% that is a addition of nearly 6%.
Hence dont be surprised if ONGC dont make a huge impact on market and Private sector banks dictate terms to the market.
Sector specific - Power, oil and gas, telecom these will be the sectors where we will be seeing reduction in weightage and it will be the banking pack which will gain the most because the weight will go up significantly from around 11.8% to 18.2%. But we need to breakdown the banking sector into the public sector banks and the private sector banks. The public sector banks weight will remain same from around 4.5% to the same around 4.5% but private banks – the weight will go up from 6.2% to 12.3% that is a addition of nearly 6%.
Hence dont be surprised if ONGC dont make a huge impact on market and Private sector banks dictate terms to the market.
Friday, June 19, 2009
Inflation Fundas
TV Channels blaring that India's inflation rate slipped into the negative for the first time in 30 odd years. What does it really mean ? It really means nothing to the common man!
Prices are still soaring or atleast stable at their peak - and why is this not reflected in the Inflation numbers ?
This is because India calculates Inflation differently than other countries
* India uses something called the Wholesale Price Index (WPI) to calculate and then decide the inflation rate in the economy.
* Most other developed and developing countries use the Consumer Price Index (CPI) to calculate inflation.
Whats the difference between the two ?
Wholesale Price Index (WPI)
WPI, published in 1902, is a economic indicator that was used by many policy makers and it was replaced by CPI by most countries in the 1970s
WPI measures the change in the average price level of goods traded in wholesale market. In India, about 435 commodities data on price level is tracked through WPI. This price index is published on a weekly basis with a lag of about 2 weeks.
Consumer Price Index (CPI)
The CPI or the Consumer Price Index is a statistical time-series measure of a weighted average of prices of a specified set of goods and services purchased by consumers. It tracks the prices of goods and services that consumers actually buy therefore providing a more accurate picture of the inflation.
Although India doesn't officially follow CPI - they do publish the CPI index numbers - however, only monthly with a delay of more than 2 months
While the WPI Inflation numbers have slipped into the negative and is reported to be at -1.6%, the CPI numbers are at a whopping 8.7% as declared for April 2009
Next time the inflation numbers are announced - you know what to make of it :)
Prices are still soaring or atleast stable at their peak - and why is this not reflected in the Inflation numbers ?
This is because India calculates Inflation differently than other countries
* India uses something called the Wholesale Price Index (WPI) to calculate and then decide the inflation rate in the economy.
* Most other developed and developing countries use the Consumer Price Index (CPI) to calculate inflation.
Whats the difference between the two ?
Wholesale Price Index (WPI)
WPI, published in 1902, is a economic indicator that was used by many policy makers and it was replaced by CPI by most countries in the 1970s
WPI measures the change in the average price level of goods traded in wholesale market. In India, about 435 commodities data on price level is tracked through WPI. This price index is published on a weekly basis with a lag of about 2 weeks.
Consumer Price Index (CPI)
The CPI or the Consumer Price Index is a statistical time-series measure of a weighted average of prices of a specified set of goods and services purchased by consumers. It tracks the prices of goods and services that consumers actually buy therefore providing a more accurate picture of the inflation.
Although India doesn't officially follow CPI - they do publish the CPI index numbers - however, only monthly with a delay of more than 2 months
While the WPI Inflation numbers have slipped into the negative and is reported to be at -1.6%, the CPI numbers are at a whopping 8.7% as declared for April 2009
Next time the inflation numbers are announced - you know what to make of it :)
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